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Question
Discuss briefly the meaning of Managed Floating Exchange Rate.
Solution
Managed Floating Exchange Rate: This rate of exchange is determined in a managed floating exchange rate system. The managed floating system of exchange rate combines the features of both the fixed exchange rate as well as the flexible exchange rate. On one hand, the foreign exchange market is allowed to operate freely and on the other hand, there is an official declaration of rules or guidelines for the intervention by the monetary authority. In other words, the managed floating exchange rate regime determines the exchange rate through the market forces with intervention of the monetary authority as and when required.
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