Explain the meaning of Managed Floating Exchange Rate?

1.	Explain the meaning of Managed Floating Exchange Rate?
Answer» 1. Managed floating exchange, rate is a mixture of a flexible exchange rate (the float part) and a fixed exchange rate (the Managed part). 2. In other words, it refers to a system in which foreign exchange is determined by free market forces (demand and supply forces), which can be influenced by the invention of the central bank in foreign exchange market. 3. Under this system, also called Dirty floating, central banks intervene to buy or sell foreign currencies in an attempt to stabilise exchange rate movements in case of extreme appreciation or depreciation.

Answer»

1. Managed floating exchange, rate is a mixture of a flexible exchange rate (the float part) and a fixed exchange rate (the Managed part).

2. In other words, it refers to a system in which foreign exchange is determined by free market forces (demand and supply forces), which can be influenced by the invention of the central bank in foreign exchange market.

3. Under this system, also called Dirty floating, central banks intervene to buy or sell foreign currencies in an attempt to stabilise exchange rate movements in case of extreme appreciation or depreciation.

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