Can we say that even in Managed Floating System the value of Currency is pegged to an external currency?????
That is what this example indicates

Can we say that even in Managed Floating System the value of Currency is pegged to an external currency????? That is what this example indicates syste„, exchange the exchange rate through by luation is oi a fixed exchan ge rate and a flcsibu• e system, bank intervenes the the exchange rate Bithin ible orces d and bank Is rue known as 'D;rtv suppose. India has a managed . assume that • Now, it aue to excess demand rupees the value 59. 75Jdc,nar. then increasing Simularty, due to excess supply of rupees. the o' c' 6025id011ar, then will increase demand runnng down its holdings of bpes ot Exchange Rate systernst fs Of DEMAND FOR FOREIGN EXCHANGE hand (or outflow) of foreign exchange comes from those Feople Bho r.x•d to nuke currency It is demanded by Of Goods and Strvices: Foreign Exchange us demanded to make tlÄ• payment ior •ports of goods and services. roursrn: Forejgn exchange is needed to expenditure in foreign tours. Gnilaterai Transfers sent abroad Foreign evchnnge tor making unilateral transters like sending gifts to other countnes. Purc*use of Assets in Foreign Countries. It is demandÄl to make for shares, bonds, etc in the foreign countnes when people to make gains

Dear student,

Under a managed floating exchange rate the exchange rate is allowed to fluctuate freely on the basis of the market forces of demand and supply but the government might intervene in order to avoid frequent and extreme fluctuations.  The government might fix for itself a range of fluctuation that it would tolerate. If the fluctuation goes beyond the range then ot would intervene in the market. 

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