Due to the ever increasing global trade, the fluctuations between the values of currencies across the world have also increased considerably. Thus the countries follow different types of exchange rate regimes available in order to manage its currency with respect to a foreign currency and the foreign exchange market. These regimes are closely related to the monetary policy of the country. They both are actually dependent on several common factors. These regimes have proved to be beneficial particularly for developing countries as they can avoid serious fluctuations in their currency value.