Explanation:

Exchange rates – They link national currencies for purposes of international trade. There are broadly two kinds of exchange rates: fixed exchange rate and floating exchange rate

Fixed exchange rates – When exchange rates are fixed and governments intervene to prevent movements in them Flexible or floating exchange rates – These rates fluctuate depending on demand and supply of currencies in foreign exchange markets, in principle without interference by governments.

Statement 1: IMF does not peg a currency’s level. Pegging of currencies by a central authority was done earlier in the Gold system where currencies were fixed in value.

Statement 2: In this system, currencies freely float apart from some occasional interventions. The more a nation’s currency is in demand, the higher will be its value in forex market.

If a nation follows managed floating system, all its external transactions are based on this system. It cannot fix its currency level in opposition to the market.