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Managed Float

Managed float is a currency which exchange rates are determined by market forces most of the time, but in special circumstances the authorities will put restrictions on the market price. In a floating exchange rate system, in cases of extreme appreciation or depreciation, a central bank will normally intervene to stabilize the currency. Thus in many cases, the exchange rate regimes of floating currencies may more technically be known as a managed float. A central bank might, for instance, allow a currency price to float freely between an upper and lower bound, a price "ceiling" and "floor". Management by the central bank may take the form of buying or selling large lots in order to provide price support or resistance.

 

 

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