Managed float

(redirected from Dirty Floating)

Managed float

Also known as "dirty" float, this is a system of floating exchange rates with central bank intervention to reduce currency fluctuations.

Managed Float

A floating exchange rate in which a government intervenes at some frequency to change the direction of the float by buying or selling currencies. Often, the local government makes this intervention, but this is not always the case. For example, in 1994, the American government bought large quantities of Mexican pesos to stop the rapid loss of the peso's value.

Strictly speaking, even a central bank's intervention to raise or lower interest rates could be considered a managed float. However, because most floating currencies manage their regimes with occasional central bank involvement, the term applies mainly to frequent or dramatic interventions. A managed float is also known as a dirty float. See also: 1994 Mexican economic crisis, Floating currency, Fixed exchange rate.
References in periodicals archive ?
On May 1999, Pakistan adopted the system of dirty floating exchange rate and the currency was pegged to the US dollar by removing the multiple exchange rate system.
This period was marked with depletion of foreign exchange reserves, economic sanctions imposed by the Western countries, freezing of foreign currency accounts, use of multiple exchange rates and later, adoption of the dirty floating exchange rate, and use of export-performance linked export subsidies.