Title: How Do Currency Exchange Rates Work?
Headings: How Do Currency Exchange Rates Work?
How Do Currency Exchange Rates Work?
There are 2 types and 3 factors that affect them
Key Takeaways
2 Kinds of Exchange Rates
Flexible
Fixed
Why the Euro Is So Special
Three Factors Affecting Exchange Rates
How Exchange Rates Affect You
Article Sources

Content: Prices change constantly for the currencies that Americans are most likely to use. These include Mexican pesos, Canadian dollars, European euros, British pounds, and Japanese yen. These countries use flexible exchange rates. 3 ﻿ The government and central bank don't actively intervene to keep the exchange rate fixed. Their policies can influence rates over the long term, but for most countries, the government can only influence, not regulate, exchange rates. Fixed
Other currencies, like the Saudi Arabian riyal, rarely change. That's because those countries use fixed exchange rates that only change when the government says so. These rates are usually pegged to the U.S. dollar. Their central banks have enough money in their foreign currency reserves to control how much their currency is worth. To keep the exchange rate fixed, the central bank holds U.S. dollars.