Question

a) Has Managed Float exchange rate system succeeded in maintaining the Ghana Cedi’s value against its major trading currencies?

Answer 1

Managed float exchange system is an exchange system in which Central banks are intervening regularly into the exchange rate Markets and regularly synchronising their balance of the payments and managing the prices of the currency.

In case of Ghana, the central bank has been involved in the managed float of exchange rate system and it has tried to control the domestic exchange rate of Ghana cedi's value against other currencies because it wants to control the the fluctuation of the movement of the currency and it is called a dirty float system and it has been successful to an extent because these managed float systems are helpful in prevention of the depreciation of the domestic currency against the foreign currency, and these are also important in prevention from sudden crash of domestic currency so the central bank has succeeded to a limit.