The collapse of the Bretton Woods system in 1970s brought major changes and broad variety of choices for exchange rate regimes, each country had been free to choose any form of exchange arrangement, varying from pure free-floating to intermediate regimes, hard pegs, crawling pegs, currenc...

An economy’s real exchange rate plays an important role in resource allocation as it determines the relative price of tradable and nontradable goods. It also guides the consumption and investment decisions of economic agents. Exchange rate misalignment occurs when the real exchange rate be...