When government intervention attempts to reduce for exporters and importers the uncertainty caused by disruptive exchange rate changes for the short and medium term, it is referred to as _________.

Question

Quizplus · Accepted Answer

When the government attempts to reduce uncertainty caused by exchange rate changes for the short and medium term, it is referred to as "leaning against the wind." This means that the government is taking action to counteract the effects of exchange rate fluctuations on the economy, rather than allowing the exchange rate to move freely. Smoothing out daily fluctuations, unofficial pegging, and a dirty float are all related to exchange rate management but do not specifically address government intervention to reduce uncertainty for exporters and importers.

When Government Intervention Attempts to Reduce for Exporters and Importers