ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In simple terms, a managed floating exchange rate is a system where currencies fluctuate daily but the regulatory authorities, including the government and the Reserve bank of India, may step in to control and stabilize the value of the currency.

Detailed explanation-2: -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-3: -In March 1992, Liberalised Exchange Rate Management System (LERMS) involving the dual exchange rate was instituted. A unified single market-determined exchange rate system based on the demand for and supply of foreign exchange replaced the LERMS effective March 1, 1993.

Detailed explanation-4: -A floating exchange rate is an exchange rate system where a country’s currency price is determined by the foreign exchange market, depending on the relative supply and demand of other currencies. A floating exchange rate is not restrained by trade limits or government controls, unlike a fixed exchange rate.

Detailed explanation-5: -Brazil. South Korea. Chile. South Africa. Turkey. New Zealand. 30-May-2022