When the central bank of a country intervenes in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency,the country is said to be following a _____ system.

Question

Quizplus · Accepted Answer

When a central bank intervenes in the foreign exchange market, buying or selling its own currency to maintain a desired exchange rate, it is said to be following a "dirty float" system. This system allows for some flexibility in exchange rates, but the central bank still actively manages the currency's value.

When the Central Bank of a Country Intervenes in the Foreign