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floating exchange rate


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An exchange rate with no government or central bank action to keep it stable. In a pure or ‘clean’ float there is no government or central bank intervention at all in the foreign exchange market, and determination of the exchange rate is left to market forces. In a managed or ‘dirty’ float the monetary authorities of one or both of the countries do intervene in the foreign exchange market, but at their own discretion.

Subjects: Economics.


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