Question

Give meaning of managed floating exchange rate.

Explain the meaning of Managed Floating Exchange Rate.

What is 'managed floating exchange rate'?

Answer 1

The managed floating exchange rate is the system in which the exchange rate is determined by the market forces and controls the value of currency appreciation or depreciation by the Central Bank.

Answer 2

Managed floating is a system which allows adjustments in exchange rate according to a set of rules and regulations which are officially declared in the foreign exchange market. It is the combination of both fixed exchange rate and the flexible exchange rate. Here, the exchange rate is agreed on the basis of market forces along with the involvement of the monetary authority.