Managed Currency

(redirected from Intervention in Foreign Exchange Markets)
Also found in: Dictionary.
Related to Intervention in Foreign Exchange Markets: Central bank intervention

Managed Currency

A currency with an exchange rate set or influenced by a government. 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 creates a managed currency. However, because most floating currencies manage their regimes with occasional central bank involvement, the term applies mainly to frequent or dramatic interventions. See also: 1994 Mexican economic crisis, Floating currency, Fixed exchange rate.
References in periodicals archive ?
Many authors - Dooley and Sharer (1983), Corrado and Taylor (1986), Sweeney (1986), Friedman (1988), and Kritzman (1989) - have cited the existence of central bank intervention in foreign exchange markets as a potential explanation for the profitability of technical trading rules.