gold convertibility was replaced by a system of floating exchange rate ( today, the U.S. dollar - the unofficial world currency- is merely a piece of a paper on which is written 'in god we trust' . God not gold ) a freely ( or clean ) floating exchange rate is determined purely by supply and demand.
theoretically, in the absence of speculation, exchange rate should reflect purchasing power parity - the cost of a giving selection of good and services in different countries.