Question

Would the central bank need tointervene in a managed floating system? Explain why? ​

Answer 1

Managed floating system is a mixture of two systems of exchange, i.e. fixed exchange rate system and flexible exchange rate system. In this system, the Central Bank can intervene to purchase or sell foreign currencies in an effort to moderate exchange rate movements, whenever they feel such actions are appropriate.

Explanation:

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Answer 2

Answer:

In a managed floating system, foreign exchange rate is determined by market forces. However, the central bank needs to intervene in this system in order to restrict the fluctuations in the exchange rate within certain limits. The aim is to keep exchange rate close to desired target values

Explanation:

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