In saying that the present system of floating exchange rates is managed, we mean that
A)countries that allow their exchange rate to move freely will lose their borrowing privileges with the IMF.
B)the value of any IMF member's currency can only vary 2 percent from its par value.
C)IMF officials determine exchange rates on a day-to-day basis.
D)the central banks of various countries sometimes buy and sell foreign exchange to alter undesirable trends in exchange rates.

Question

Quizplus · Accepted Answer

Managed floating exchange rates mean that while currencies can fluctuate in value in response to market forces, central banks may intervene by buying or selling currencies to smooth out volatile fluctuations or to steer the exchange rate in a desired direction. This does not imply daily rate setting by the IMF, strict par value adherence, or borrowing privileges being contingent on a free float.

In Saying That the Present System of Floating Exchange Rates