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Nicaragua bases the valuation of its currency on the U.S. dollar. The value of Nicaragua's currency is changed based on the changes in the value of the dollar. This is an example of a ________ exchange
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Nicaragua bases the valuation of its currency on the U.S. dollar. The value of Nicaragua's currency is changed based on the changes in the value of the dollar. This is an example of a ________ exchange rate system.

User Hille
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Answer:

The floating exchange system

Step-by-step explanation:

The floating exchange rate is a system where the Forex market determines the currency price of a country relative to other currencies. The forces of demand and supply drive the prices.

In the floating exchange system, governments do not directly fix their exchange rates as they do in the fixed-exchange-rate. However, through central banks' monetary policies, governments try to keep their currency prices competitive for international trade.

User SimonBarker
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