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Question : 17
Total: 24
Discuss briefly the concept of managed floating system of foreign exchange rate determination
Solution:
Managed floating system- is a system in which foreign exchange rate is determined by the market forces and central bank influences the exchange rate through intervention in the foreign exchange market.
Central bank interferes to restrict the fluctuations in the exchange rate within limits.
For this central bank maintains the reserve of foreign exchange to ensure that the exchange rate stays within the targeted value. It is also known as "Dirty floating".
Central bank interferes to restrict the fluctuations in the exchange rate within limits.
For this central bank maintains the reserve of foreign exchange to ensure that the exchange rate stays within the targeted value. It is also known as "Dirty floating".
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