TYPES

Float
Main article: Floating exchange rate

Floating rates are the most common exchange rate regime today. For example, the dollar, euro, yen, and British pound all float. However, since central banks frequently intervene to avoid excessive appreciation or depreciation, these regimes are often called managed float or a dirty float.
Pegged float

Here, the currency is pegged to some band or value, either fixed or periodically adjusted. Pegged floats are:

* Crawling bands: the rate is allowed to fluctuate in a band around a central value, which is adjusted periodically. This is done at a preannounced rate or in a controlled way following economic indicators.
* Crawling pegs: Here, the rate itself is fixed, and adjusted as above.
* Pegged with horizontal bands: The currency is allowed to fluctuate in a fixed band (bigger than 1%) around a central rate.

Fixed
Main article: Fixed exchange rate

Fixed rates are those that have direct convertibility towards another currency. In case of a separate currency, also known as a currency board arrangement, the domestic currency is backed one to one by foreign reserves. A pegged currency with very small bands (< class="editsection">