The exchange rate is the rate at which one currency trades against another on the foreign exchange market. If the present exchange rate is £1=$1.42, this means that to go to America you would get $142 for £100. Similarly, if an American came to the UK, he would have to pay $142 to get £100. A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a basket of other currencies, or another measure of value, such as gold. The Determinants of Exchange Rates in a Floating Exchange Rate System - Duration: 14:50. Jason Welker 39,902 views