Managed float

(redirected from Managed Floating Exchange Rate System)

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 ?
Neighboring countries like India, Bangladesh, Sri Lanka, Afghanistan and Myanmar are already practicing managed floating exchange rate system. Accordingly, Pakistan policy makers are confronted with a big question: whether to retreat to market determined currency rate immediately or to delay it till the macro-economic stability is achieved.
Then a managed floating exchange rate system was adopted in January 1982.
The Central Bank of Iran has, over the past decade, implemented a managed floating exchange rate system by which the rate was fixed through the injection of foreign exchange revenue, mostly generated from oil; however, during the last 18 months the weakening of the Rial has accelerated and in October the acceleration rate increased dramatically.

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