How are exchange rates determined and who enforces them? How does a country buy its own currency and what does that mean?
In: Economics
Exchange rates are not enforced. There is always someone who owns money and sells it for a given price. Most of the time banks take that role.
Usually when somebody buys a lot of currency the value goes up and when there is a lot to sell the price goes down. Countries buy their own currency from banks or exchanges to drive up the value of their currency and pay that with foreign currency they received from trading or by borrowing.
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