dirty float

Dirty float

A system of floating exchange rates in which a government may intervene to change the direction of the value of the country's currency.

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.

dirty float


dirty float

the manipulation by the monetary authorities of a country's EXCHANGE RATE under a FLOATING EXCHANGE-RATE SYSTEM, primarily in order to gain a competitive advantage over trade partners. Thus, the authorities could intervene in the FOREIGN EXCHANGE MARKET to stop the exchange rate from otherwise appreciating (see APPRECIATION 1) in the face of market forces or, alternatively, they could deliberately engineer a DEPRECIATION of the exchange rate. See BEGGAR-MYNEIGHBOUR POLICY.
References in periodicals archive ?
We believe the level (corridor)-based intervention mechanism by design welcomes unnecessary speculative activity and ultimately the CBR is likely to abandon it and switch to a dirty float regime with interventions triggered mainly by the volatility and financial stability considerations.
During this period Pakistan passed through different exchange rate regimes including fixed exchange rate, managed floating exchange rate, multiple exchange rate, dirty float and flexible exchange rate.
This means that Tenge will not be in absolute free float mode; the ability of National Bank to intervene makes it conditional float, also called dirty float.
This spellbinding story of intrigue and deception features a complex web of characters engaged in naked trades and dirty floats.