Difference between Managed Floating Exchange Rate System and Crawling Peg System????

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Question

Difference between Managed Floating Exchange Rate System and
Crawling Peg System????

Shvetika Sharma · Accepted Answer

Basis
of Difference

Crawling
Peg Exchange Rate

Managed
Floating Exchange Rate

1
Definition

In
this type of exchange rate regime the central bank fixes the
exchange rate and continuously adjusts it in response to any
fluctuations

Under
this system the exchange rate is allowed freely to be determined by
the demand and the supply forces with the central bank intervening
in the exchange rate market in order to avoid any unforeseen fall
or rise in the exchange rate

2
Degree of floating

In
this case, the exchange rate is fixed; hence the degree of floating
is low

In
this case, the degree of floating is comparatively high, as the
exchange rate is determined by the market forces

3
Degree of government intervention

There
is high degree of government intervention as the exchange rate and
the required adjustments is determined by the government/central
bank

There
is low degree of government intervention as the government/central
bank may interfere depending on the economic scenarios

Basis of Difference	Crawling Peg Exchange Rate	Managed Floating Exchange Rate
1. Definition	In this type of exchange rate regime the central bank fixes the exchange rate and continuously adjusts it in response to any fluctuations.	Under this system the exchange rate is allowed freely to be determined by the demand and the supply forces with the central bank intervening in the exchange rate market in order to avoid any unforeseen fall or rise in the exchange rate
2. Degree of floating	In this case, the exchange rate is fixed; hence the degree of floating is low.	In this case, the degree of floating is comparatively high, as the exchange rate is determined by the market forces.
3. Degree of government intervention	There is high degree of government intervention as the exchange rate and the required adjustments is determined by the government/central bank.	There is low degree of government intervention as the government/central bank may interfere depending on the economic scenarios.