Introduction The significance of exchange rates within the economy of any society cannot be emphasized enough as it is a relevant price concept for any nation. Alterations in exchange rates can lead to massive reallocations of raw materials, resources and production between tradable and non-tradable sectors of any country's economy. But rarely is the concept of an exchange rate really represented for what it really is: a relative price, which like any other economic entity responds to the laws of supply and demand. When viewed from a price-based approach, the exchange rate, according to fundamental economic theories, can then be evaluated and determined within an economic system, its behavior and meaning can then be understood by outlining and lending the relative attention to certain factors within the economic system that influence it. In recent times, the IMF has highlighted the need for better coordination of exchange rate and monetary policies in key areas of macroeconomic management in light of increasing capital mobility. In close relationships, the advantages or merits of exchange rate regimes and their alternatives can be better discussed in a coherent monetary framework in terms of the interaction of monetary and exchange rate policies. Exchange rates and exchange rate regimes are far from distinctive entities in a broader and more versatile set of arrangements defined as the monetary order, so policies geared towards them should generally and ideally be discussed in this broader and more versatile context . An appropriate or adequate exchange rate regime is in most cases perceived as a complex and technical process. Several nations around the world have adopted the floating...... middle of document......tp://www.dof.gov.ae/en-us/publications/Lists/ContentListing/Attachments/53 / 1.pdfSebastian 11 November 2013.Latter, T. (1996) The choice of exchange rate regime. Center for Central Banking Studies, Bank of England, London. Jeong, J. & Lee, Y. (2001) International transmission of inflation under alternative exchange rate regimes: Empirical evidence and its implications. Global FinanceJournal, 12, p.121-137.McKinnon, Ronald. (1990). The exchange rate and the trade balance: island economies versus open economies; Open Economies Review, Vol. 1, No.1.Mabry and Ulbrich, (1994) Economics. 2nd edition. USA, Houghton Mifflin Company.Morris, G. (2003) Too Sensational: On the Choice of Exchange Rate Regimes. EconomicJournal, 113(491), p.663.Mishkin, FS (1996) Understanding Financial Crises: A Developing Country Perspective.NBER Working Paper, 5600, p..1-21.