BANKING AFFAIRS

Detailed explanation-1: -The correct answer is managed float. A managed floating exchange rate is an exchange rate in which the exchange rate is neither entirely free nor fixed. Rather the value of the currency is kept in a range against currency by central bank intervention.

Detailed explanation-2: -UPSC Mains Notes: In India, the exchange rate system is managed floating from 1994 onwards and hence the relevant currency movements are appreciation and depreciation. Managed float regime is the environment in which exchange rates fluctuate from day to day.

Detailed explanation-3: -India has been operating on a managed floating exchange rate regime since March 1993, marking the start of an era of a market-determined exchange rate regime of the rupee with provision for timely intervention by the central bank.

Detailed explanation-4: -In India, the exchange rate system is managed floating (from 1994 onwards) and hence the relevant currency movements are appreciation and depreciation. Here, the exchange rate is determined in the open market through the pressure of buying and selling of foreign currencies.

Detailed explanation-5: -A managed floating exchange rate is an exchange rate system that allows a nation’s central bank to intervene regularly in foreign exchange markets to change the direction of the currency’s float and/or reduce the amount of currency volatility. This exchange rate system is also known as a “dirty float”.