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Define a floating exchange rate.

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Please give some common descriptions of floating exchange rate and gives some relevant web references.

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Solution Summary

The solution lists seven different definitions of a floating exchange rate, and each definition is a sentence or two of explanation. The explanation is given in 315 words. References are given.

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Define a floating exchange rate?

1. A country's decision to allow its currency value to change freely. The currency is not constrained by central bank intervention and does not have to maintain its relationship with another currency in a narrow band. The currency value is determined by trading in the foreign exchange market

2. An exchange rate where the value is determined by market forces. Even floating currencies are subject to intervention by the monetary authorities. When such activity is frequent the float is known as a dirty float.

3. A ...

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