Fixed flexible exchange rate
Within this pure definition of flexible exchange rate, we can find two types of flexible exchange rates: pure floating regimes and managed floating regimes. On the one hand, pure floating regimes exist when, in a flexible exchange rate regime, there are absolutely no official purchases or sales of currency. A fixed exchange rate is the rate at which the government (central bank) establishes and maintains the official exchange rate. A fixed price will be determined in relation to a major world currency (usually the US dollar or other major currencies such as the euro, yen or a basket of currencies). Yet with flexible exchange rates, A and B can each choose any monetary policy they like, and the exchange rate will simply change over time to adjust for the inflation differentials. This independence of domestic policy under flexible exchange rates may be reduced if there is an international demand for monies.