Fixed vs floating exchange rates (NP)

Episode number 7 of Series “The Global Economy”.
This episode of the Open Learning Economics course examines the history of exchange rates in contemporary capitalism. After World War II, exchange rates were fixed to the value of the US dollar which in turn was fixed to the price of gold. Over the 1960’s, however, the rise of speculation on international currencies saw exchange rates fluctuate at such an unstable rate that in 1971 the US government decided to allow its currency to be determined by the market rather than be affixed to gold prices. Since 1973 the value of currency has been determined by market forces rather than by being fixed to government determined rates. Using the example of the 1970s Oil Crisis, a panel of economists argue that market-determined exchange rates allow for greater flexibility.