The country that has been using to set the value of its currency based on the other world currency value is having an exchange rate being fixed. Thus, option B is correct.
What is an exchange rate?
The exchange rate in terms of finance can be defined as the rate of one currency when it has been changed or exchanged for another currency.
The exchange rate can be explained with an example considering, that the exchange rate of US dollar and Japanese Yen be 10 US dollar, thereby it states that 1 US dollar on exchanging with Yen can be equivalent to 10 Yen.
The exchange rate can be:
- freely
- floating,
- fixed,
- pegged
- managed float
The exchange rate over which the value of the currency of one country has been found to be dependent on the world currency has been the type of fixed exchange rate. Thus, option B is correct.
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