Fixed exchange rate is the rate which is officially fixed by the government or monetary authority and not determined by market forces. Only a very small deviation from this fixed value is possible. In this system, foreign central banks stand ready to buy and sell their currencies at a fixed price. While each country makes its own decision to enter the market with a fixed or floating exchange rate, it is rare that a currency is wholly fixed or floating. This is due to the fact that there are a variety of market pressures constantly influencing exchange rates. Floating currency exchange rates pros vs. cons In reality, few exchange rate systems are 100 percent floating, or 100 percent pegged. Countries using a pegged rate can avoid market panics and inflationary disasters by using a floating peg.They peg their rate to the U.S. dollar, and that rate doesn't fluctuate from day to day.