Managed Floating

What is Managed Floating Exchange Rate System?

Managed floating: Managed floating is the contemporary international financial environment in which exchange rates varies from day to day, but central banks try to influence their nations’ exchange rates by purchasing and selling currencies to perpetuate a certain span.

Without any authorized worldwide agreement, the world has progressed on to what can be elucidated as a regulated floating exchange rate system. This rating system is a blend of a flexible exchange rate system and a fixed rate system; i.e., the managed part. Central banks interfere to purchase and sell foreign currencies by trying to average exchange rate movements whenever such pursuits are feasible. Official reserve transactions are, hence, unequal to zero.

Exchange rate or forex rate is the rate at which the domestic currency is dealt for a foreign currency. Likewise, it is the rate that depicts the value of domestic currency in expressions of other currencies. Here, the value of Rupee is nothing but the value computed in terms of other currencies like the US Dollar ($).

Exchange rate system is the organisation for the movement of exchange rate. There are fundamentally 3 types of exchange rate systems on a broad scale: floating or flexible exchange rate system, fixed exchange rate system and managed floating (intermediate exchange rate system).

The above mentioned is the concept that is explained in detail about Managed Floating for the class 12 students. To know more, stay tuned to BYJU’S.