Limitation of the Linked Exchange Rate System . A country's central bank loses some of its control over interest rates, inflation and other issues of basic monetary policy with a linked currency.

Nowadays, the world’s major currencies have floating exchange rates. In this system, market forces determine currency values, limiting a government’s ability to determine exchange rates.

What Is a Floating Exchange Rate? A floating exchange rate is a regime where the currency price of a nation is set by the forex market based on supply and demand relative to other currencies. This ...

A PERENNIAL question in international economics—whether in academia or in policy circles—concerns the optimal choice of exchange rate regime. After the breakdown of the Bretton Woods system in the ...

Exchange rate (non)neutrality. To see this, take a fully financially integrated country economy, suffering from weak policy credibility (based on its past policy track record), and assume that its ...

Nigeria finally did the painful thing everyone said that it had to do. On June 20, it unpegged its currency, the naira, from the US dollar and promised to pursue a flexible exchange-rate system ...

Although the theoretical relationships are ambiguous, evidence suggests a strong link between the choice of the exchange rate regime and economic performance. The paper argues that adopting a pegged ...

On July 21, 2005, after more than a decade of strictly pegging the renminbi to the U.S. dollar at an exchange rate of 8.28, the People's Bank of China (PBOC 2005a) announced a revaluation of the ...

In July 2005, the PBOC bowed to heavy pressure from the U.S. government and announced that it would lift the peg and phase in a more flexible exchange rate system so that the renminbi could ...

The exchange rates of major currencies haven’t always been so volatile. The Bretton Woods Agreement of 1944 ushered in a system of international exchange-rate fixity and stability.