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Foreign Exchange Reserves
Assets held by central banks in foreign currencies, used to back liabilities on their own currency as well as to influence monetary policy.
Fixed Exchange Rate
A system where the government or central bank sets the official exchange rate in relation to the currency of another nation or the value of gold.
Flexible Exchange Rate
A rate of exchange that is determined by the international demand for and supply of a nation’s money and that is consequently free to rise or fall because it is not subject to currency interventions. Also referred to as a “floating exchange rate.”
Fixed Exchange Rate
A currency system where the value of a currency is pegged against another currency, a basket of currencies, or another measure of value.
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