Economics · Exchange Rate Systems
How is the exchange value of a nation's currency determined under a 'Basket of Currency' system?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is set arbitrarily by the International Monetary Fund (IMF) on an annual basis
- 2It is pegged exclusively to the value of physical gold reserves held by the central bank
- 3It is determined solely by the forces of demand and supply in the domestic market
- 4It is fixed or linked in terms of a weighted average of selected major international currencies✓
Correct answer
It is fixed or linked in terms of a weighted average of selected major international currencies
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