Managed float refers to a flexible exchange rate system where the exchange rates are determined by market forces, but central banks may intervene occasionally to influence the exchange rate. This intervention can be in the form of buying or selling currencies in the foreign exchange market. Therefore, a managed float is a hybrid of a freely floating exchange rate system and a fixed exchange rate system.

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Managed Float Means

Question 210

Multiple Choice

Managed float means

A) a fixed exchange rate system with regularly scheduled periodic devaluations
B) a freely floating exchange rate system
C) a hybrid of freely floating exchange rates with occasional intervention by central banks
D) a fixed exchange rate system managed by the European Community
E) a flexible exchange rate system managed entirely by the IMF

Correct Answer: