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How a country Maintains a fixed exchange rate?

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12/01/2007

A country maintains a fixed exchange rate through a balance supply and demand of money(monetary terms) in a particular country. A domestic currency can compete with an international currency by just utilizing it for the importation of an intermediate goods (raw materials) in order to minimize the value. In return, the exportation of a final goods may lead to a higher cost and the domestis market will have a stable exchange rate