Explain the meaning of Managed Floating Exchange Rate. - Vidyadip

Question

Explain the meaning of Managed Floating Exchange Rate.

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Answer

Managed floating exchange rate is the flexible exchange rate with intervention by the central bank through the market for foreign exchange to reduce fluctuations in the rate. When foreign exchange rate is too high, the central bank starts selling the foreign currency from its reserves. When it is too low central bank starts buying foreign currency in the market.

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