The Adoption of Floating Exchange Rate Financial Essay
The aspect of exchange rate is fixed by international finance and international economy. It is an important phenomenon when analyzing the level of international relations in the field of foreign exchange. As an important microeconomic variable, foreign exchange helps determine the portfolio that determines a country's balance of payments. This chapter is structured as follows: Sect. 11. the literature on exchange rate issues in Bangladesh. the behavior of the NER by focusing on the behavior of interest rates and international reserves during floating and pre-floating regimes. In Sect. 11.4 we assess the de facto exchange rate regime of: Both floating and fixed exchange rate systems have advantages and disadvantages. Therefore, no country can allow a continuously floating exchange rate as it is not healthy for the economy Madura, 2008. On the other hand, no country can allow a fixed exchange rate especially in the era of globalization. That's why a country tries to do that. The Bretton Woods Agreement established a system of fixed exchange rates in which the currencies of all countries were pegged to the US dollar, which in turn was based on the gold standard. In 1971, the Bretton Woods Agreement was in effect. effect. the existing exchange rate system was already under pressure. Criteria for intervention. The Monetary Policy Committee looks at the following criteria when assessing potential interventions for monetary policy purposes. The exchange rate must be exceptionally high or low. The exchange rate should not be justified by fundamental economic factors. Intervention must be consistent with our vision,