Question

Are countries using the floating exchange better off today than countries not using the floating exchange rate system? please give me an elaborate and unique answer. No copy and paste, and no handwriting please. thanks!

Answer 1

Few countries use floating rate exchange and few countries do not use floating exchange rate.

A country should have strong foreign exchange reserve for not using floating exchange rate. E.g. China is doing very good economically while not using floating exchange rate. China has little import than it's export and it has huge trade surplus and able to make huge foreign reserve.

However, all countries are not like china. Countries like India, Brazil, Singapore are using floating exchange rate and they are also doing good. They allow currency to appreciate or depreciate as the their country's economic condition and hence it is natural and export/import will not get sudden shock until there is major global economic crisis.

Not all they country can manipulate currency like china. You need to have huge foreign exchange reserve and also trade surplus to do that. In most of the cases, country with floating exchange rate are doing good.