Exchange rates are reference points, not offers. This guide explains the forces behind the numbers you see.
Free-Floating Exchange Rates
Major currencies like the US Dollar, Euro, Japanese Yen, and British Pound operate under a free-floating exchange rate system. Their market value is determined continuously by global supply and demand in international capital markets.
Fixed Pegs and Managed Crawling Pegs
Countries with heavy oil revenues or trade concentration often peg their currency to a reserve asset. For example, the Saudi Riyal (SAR), UAE Dirham (AED), and Qatari Riyal (QAR) are fixed to the USD.
Maintaining a peg requires central banks to hold massive foreign exchange reserves, buying or selling domestic currency in open market operations to defend the official peg.