Question

What does it mean, that certain countries have their currencies subject to managed floating international exchange rate?

Answer 1

A 'managed floating exchange rate' is a regime that allows the Central Bank to intervene on a daily basis in the Foreign exchange markets so as to change the direction of the currency's float and therey increase its balance of payments during volatile periods.

The Central Banks and Governments of the countries that opt for this regime have a wide variety of tools to manage the FX rates, like monetary policies as well as intervention in currency markets.

This mainly aims to protect the country from huge fluctuations in the exchange rates and the country's foreign trade including cross border payments.

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