Exchange Rate Policies

Exchange rate policies refer to the strategies a country uses to manage the value of its currency compared to others. These policies can influence trade, inflation, and economic stability. A country might let its currency float freely based on market forces or peg it to another stable currency to maintain predictability. By adjusting interest rates or intervening in currency markets, governments aim to achieve economic goals, such as boosting exports or preventing inflation. Effective exchange rate policies can enhance competitiveness and help stabilize an economy in a global market.