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

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.


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