Fixed exchange rate system
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In a fixed exchange rate, a state authority defines an exchange rate of its own currency, against another currency, a basket of currencies, or some good, such as gold. The central bank of the country will then guarantee this exchange rate; it will buy or sell its currency at this rate.
Fixed Exchange Rate System Media
Fig.1: Mechanism of fixed exchange-rate system
Fig.2: Excess demand for dollars
Fig.3: Excess supply of dollars
