pros and cons of fixed and flexible exchange rate system

Fixed currency exchange rates pros vs. cons

Fixed Pros	Fixed Cons
Enable the currency's value to remain stable	Central bank must intervene often
Can help lower inflation which encourages investment	Country loses monetary independence
The Central Bank has the power to maintain rate	Can be expensive to maintain

What are pros and cons of fixed exchange rate system?
What are the advantages and disadvantages of flexible exchange rate system?
What is the advantages of fixed exchange rate system?
What is the disadvantage of flexible exchange rate system?
Why is fixed exchange rate bad?
Is fixed exchange rate good?
What is the main advantage of flexible exchange rate?
What is the difference between fixed and flexible exchange rate?
What do u mean by flexible exchange rate?
What is a fixed exchange rate and how is its value fixed?
Who determines fixed exchange rate?
Which one of the following is a disadvantage of a fixed exchange rate system?

What are pros and cons of fixed exchange rate system?

Fixed Exchange Rate System: Advantages and Disadvantages

(i) Elimination of Uncertainty and Risk:
(ii) Speculation Deterred:
(iii) Prevention of Depreciation of Currency:
(iv) Adoption of Responsible Macroeconomic Policies:
(v) Attraction of Foreign Investment:
(vi) Anti-inflationary:
(i) Speculation Encouraged:
(ii) Adequacy of Foreign Exchange Reserves:

What are the advantages and disadvantages of flexible exchange rate system?

Flexible Exchange Rate System: Advantage and Disadvantage

(i) Automatic Adjustment in BOP: ...
(ii) No Collusion Between Internal-External Objectives: ...
(iii) Absorption of Sudden Shocks: ...
(iv) Minimum Buffer of Foreign Exchange Reserves: ...
(i) Uncertainty and Confusion: ...
(ii) Hampering Investment: ...
(iii) Risk, Instability, and Speculation: ...
(iv) Inflationary in Character:

What is the advantages of fixed exchange rate system?

The advantages of a fixed exchange rate include:

Providing greater certainty for importers and exporters, therefore encouraging more international trade and investment. Helping the government maintain low inflation, which can have positive long-term effects such as keeping down interest rates.

What is the disadvantage of flexible exchange rate system?

The main disadvantages of the flexible exchange rate system follow: Exchange rate risk: The main disadvantage of flexible exchange rates is their volatility. ... Exchange rates change in the appropriate direction when the country's inflation rate, output, and current account balance change.

Why is fixed exchange rate bad?

The downside, of course, is that countries with fixed exchange rates forfeit control of their monetary policy. That makes them more susceptible to financial shocks elsewhere in the world and can lead to more frequent and aggressive attacks by speculators.

Is fixed exchange rate good?

Fixed rates provide greater certainty for exporters and importers. Fixed rates also help the government maintain low inflation, which, in the long run, keep interest rates down and stimulates trade and investment.

What is the main advantage of flexible exchange rate?

Flexible exchange rates eliminate the need for central banks to hold international reserves. Flexible exchange rates are helpful to do away with barrier to trade and capital movements. Flexible exchange rate enhances the efficiency in the economy by achieving optimum: resources allocation.

What is the difference between fixed and flexible exchange rate?

Fixed exchange rate system is referred to as the exchange system where the exchange rate is fixed by the government or any monetary authority.
...
Difference between Fixed and Flexible Exchange Rate.

Fixed Rate	Flexible Exchange Rate
Fixed rate is determined by the central government	Flexible rate is determined by demand and supply forces
Impact on Currency

What do u mean by flexible exchange rate?

A flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand. Every currency area must decide what type of exchange rate arrangement to maintain. Between permanently fixed and completely flexible however, are heterogeneous approaches.

What is a fixed exchange rate and how is its value fixed?

A fixed exchange rate tells you that you can always exchange your money in one currency for the same amount of another currency. It allows you to determine how much of one currency you can trade for another.

Who determines fixed exchange rate?

A fixed or pegged rate is determined by the government through its central bank. The rate is set against another major world currency (such as the U.S. dollar, euro, or yen). To maintain its exchange rate, the government will buy and sell its own currency against the currency to which it is pegged.

Which one of the following is a disadvantage of a fixed exchange rate system?

Which one of the following is a disadvantage of a fixed exchange rate system: The government might change the value of the currency. Which one is not a disadvantage of a freely floating exchange rate system? The government may intervene to change the value of a given currency.