Concept:A floating exchange rate is a system where currency value is set by market conditions, not by authorities.
Explanation:In a floating exchange rate system, the value of a currency changes according to market forces.
These forces are demand for and supply of the currency.
When demand is high, the currency value rises.
When supply is high or demand is low, the currency value falls.
No government or institution fixes the rate.
Therefore, it is determined by the forces of demand and supply.
Answer:Option B — forces of demand and supply.