A dirty float, also known as a managed float, occurs when a country's government or central bank intervenes in the foreign exchange market to influence the value of its currency, rather than allowing its value to be determined purely by market forces. This is done by buying and selling foreign assets to adjust the exchange rate.

Solved

A Dirty Float Is

Question 74

Multiple Choice

A dirty float is

A) when the value of a currency is pegged relative to the value of one other currency.
B) when the value of a currency is allowed to fluctuate against all other currencies.
C) when countries intervene in foreign exchange markets in an attempt to influence their exchange rates by buying and selling foreign assets.
D) when the value of a currency is pegged relative to an anchor currency.

Correct Answer: