| Basis of Distinction | Fixed Foreign Exchange Rate | Flexible Foreign Exchange Rate |
| (i) Meaning | Fixed exchange rate means the exchange rate which is officially declared and fixed. | Flexible exchange rate means the exchange rate which is floating because it is detennined by demand and supply. |
| (ii) Government Role | It requires regular control and monitoring by the government | It does not require any intervention by the government. |
| (iii) Stability | It is stable and certain and not subject to wide fluctuations. | It is uncertain and subject to wide fluctuations. |
| (iv) Speculation | It checks speculation in foreign exchange market. | It encourages speculation. |
