Central banks also participate in the foreign exchange market to protect their nation’s currencies in what’s known in the trade as intervention. For example, the Federal Reserve says the U.S ...

For example, the Canadian dollar is a floating currency, so the market dictates its value. The value of the Hong Kong dollar, on the other hand, is pegged at a fixed exchange rate to the U.S. dollar.

The speed of adjustment is inversely related to the degree of rationing in the official foreign currency market. A once-for–all devaluation of the official exchange rate has no long-term effect on the ...