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Managed float regime

From Wikipedia, the free encyclopedia

A managed float regime, also known as a dirty float, is a type of exchange rate regime where a currency's value is allowed to fluctuate in response to foreign-exchange market mechanisms (i.e., supply and demand), but the central bank or monetary authority of the country intervenes occasionally to stabilize or steer the currency's value in a particular direction. This is in contrast to a pure float where the value is entirely determined by market forces, and a fixed exchange rate where the value is pegged to another currency or a basket of currencies.

Under a managed float regime, the central bank might buy or sell its own currency in the foreign exchange market to counteract short-term fluctuations, to prevent excessive depreciation or appreciation, or to achieve certain economic goals such as controlling inflation or boosting exports.

In an increasingly integrated world economy, the currency rates impact any given country's economy through the trade balance. In this aspect, almost all currencies are managed since central banks or governments intervene to influence the value of their currencies. According to the International Monetary Fund, as of 2013, 82 countries and regions used a managed float, or 43% of all countries, constituting a plurality amongst exchange rate regime types.[1]

International financial organizations, like the IMF, categorize countries' exchange rate regimes based on specific criteria, but these classifications aren't necessarily objective and may not fully capture the nuances of a country's exchange rate policies. For example, a country may normally have a floating exchange rate regime but intervene in times of extreme volatility, a country may formally claim to be following one exchange rate regime (de jure) while having another in practice (de facto).

For more detail on each countries' exchange rate regime it is recommended to read IMF's Annual Report on Exchange Arrangements and Exchange Restrictions.

Countries with managed floating currencies

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Map of current exchange rate regimes (2018) De facto exchange-rate arrangements in 2018 as classified by the International Monetary Fund.
  Floating (floating and free floating)
  Soft pegs (conventional peg, stabilized arrangement, crawling peg, crawl-like arrangement, pegged exchange rate within horizontal bands)
  Residual (other managed arrangement)

The below is a list of countries where, in 2022, the IMF has classified the regime as "Other managed arrangement" or "Stablized arrangement", or where the IMF states that the de jure arrangement is a managed float. The IMF reclassifies the countries frequently based on the actions of their central banks.[2]

In its annual report, the IMF also notes instances where central banks have intervened, even for countries where it still classifies the currency as free floating. For instance, the Japanese Ministry of Finance, it notes, has "intervened in the foreign exchange market in September 22, October 21, and October 24, 2022, to address excess volatility and disorderly exchange rate movement for the first time since 2011".[2]

Source:[2]
Country Stabilized arrangement Other managed arrangement De jure managed float
 Afghanistan de jure managed
 Algeria de jure managed
 Angola Other managed
 Armenia Stabilized
 Azerbaijan Stabilized
 Bangladesh Other managed
 Bolivia Stabilized
 Burundi de jure managed
 Cambodia de jure managed
 China Other managed de jure managed
 Costa Rica de jure managed
 Dominican Republic Other managed de jure managed
 Ethiopia de jure managed
 Ghana Other managed
 Guatemala Stabilized
 Guinea Stabilized de jure managed
 Guyana Stabilized
 Haiti Other managed
 Honduras Stabilized
 Iran Other managed de jure managed
 Kuwait Other managed
 Laos Other managed de jure managed
 Lebanon Stabilized
 Liberia de jure managed
 Malawi Stabilized
 Maldives Stabilized
 Mozambique Stabilized
 Myanmar Stabilized de jure managed
 Pakistan Other managed
 Papua New Guinea Stabilized
 North Macedonia Stabilized
 Romania Stabilized de jure managed
 Serbia Stabilized de jure managed
 Sierra Leone Other managed
 Singapore de jure managed
 Solomon Islands Other managed
 South Sudan Other managed
 Sudan Stabilized
 Syria Other managed
 Tajikistan Stabilized de jure managed
 Tanzania Stabilized
 Tonga Other managed de jure managed
 Trinidad and Tobago Stabilized
 Ukraine Stabilized
 Vanuatu Other managed
 Venezuela Other managed
 Vietnam Stabilized de jure managed
 Zimbabwe Other managed

See also

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References

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  1. ^ "IMF finds more countries adopting managed floating exchange rate system". Nikkei Asian Review. Nikkei. August 19, 2014. Retrieved 5 March 2015.
  2. ^ a b c IMF AREAER as of 2022