The flexible exchange rate refers to the movement of a foreign currency exchange rate in response to changes in the market forces of supply and demand. A country's currencies weaken or strengthen on the basis of their reserves of hard currency and gold, international trade balance, rate of inflation and interest rates and the strength of their economy. A country's weak currency is unattractive because it may signify economic instability while a too strong currency makes goods and services too expensive for foreigners to buy.
An exchange rate which is determined by market forces in the absence of Central Bank intervention.
A foreign exchange rate whose value is determined by market forces.
Exchange rates with a fixed parity against one or more currencies with frequent revaluation's. A form of managed float.
Under a flexible exchange rate system, the price of a currency floats freely in relation to other currencies.