How are exchange rates determined and who enforces them? How does a country buy its own currency and what does that mean?
In: Economics
No one enforces the exchange rates if it’s a freely traded currency like USD, EUR, JPY. Some currencies have centrally set exchange rates, where the central monetary body, usually a central bank, either sets the rate and then participates in the market to maintain it, or just prohibits transactions in foreign currency unless exchanged at the official rate.
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