四级考试阅读讲义_大学英语阅读_大学英语-查字典英语网

四级考试阅读讲义

　　Methods of Exchange： the Floating Exchange Rate

　　There are two main systems used to determine a currencys exchange rate： floating currency and pegged currency. The market determines a floating exchange rate. In other words， a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand， which is in turn driven by foreign investment， import/export ratios， inflation， and a host of other economic factors.

　　Generally， countries with mature， stable economic markets will use a floating system. Virtually every major nation uses this system， including the U. S. ， Canada and Great Britain. Floating exchange rates are considered more efficient， because the market will automatically correct the rate to reflect inflation and other economic forces.

　　The floating system isnt perfect， though. If a countrys economy suffers from instability， a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates， as well as disastrous inflation.

　　Methods of Exchange： the Pegged Exchange Rate

　　A pegged， or fixed system， is one in which the exchange rate is set and artificially maintained by the government. The rate will be pegged to some other countrys dollar， usually the U.S. dollar. The rate will not fluctuate from day to day.

　　A government has to work to keep their pegged rate stable. Their national bank must hold large reserves of foreign currency to mitigate changes in supply and demand. If a sudden demand for a currency were to drive up the exchange rate， the national bank would have to release enough of that currency into the market to meet the demand， They can also buy up currency if low demand is lowering exchange rates.