Current Exchange Rate arrangements Free Float The largest number of countries, about 48. allow market forces to determine their currency's value Managed Float about 25 countries combine government intervention with market forces to set exchange rates Pegged to another currency Such as the U.S. dollar or euro(through franc or mark) No national currency Some countries do not bother printing their own, they just use the U.S. dollar. For example, Ecuador has recently dollarized McGraw-Hilylrwoin 2-12 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 2-12 Current Exchange Rate Arrangements ⚫ Free Float ◼ The largest number of countries, about 48, allow market forces to determine their currency’s value. ⚫ Managed Float ◼ About 25 countries combine government intervention with market forces to set exchange rates. ⚫ Pegged to another currency ◼ Such as the U.S. dollar or euro (through franc or mark). ⚫ No national currency ◼ Some countries do not bother printing their own, they just use the U.S. dollar. For example, Ecuador has recently dollarized