Economic concepts: floating the currency

Floating is to leave the exchange rate of a currency, ie its equivalent with other currencies, determined in accordance with the forces of supply and demand in the cash market.

Government policies differ from the floating of their currencies according to the level of liberalization of their national economy, the adequacy of its performance and the flexibility of its productive apparatus. Floating is divided into the following forms:

Free float: means leaving the currency exchange rate freely changed over time according to market forces. The intervention of the monetary authorities is limited to influencing the speed of change in the exchange rate rather than limiting it. This form of currency float is followed in some developed industrial capitalist countries such as the US dollar British Pound and Swiss Franc.

Floating Floating: This means that the exchange rate is determined according to supply and demand, with the central bank intervening whenever there is a need to adjust this price against the rest of the currencies in response to a range of indicators such as the amount of the gap between supply and demand in the exchange market, Parallel exchange rate markets. This is followed by floating in some capitalist countries and a group of developing countries that peg their currencies to the US dollar, the pound sterling or the franc (formerly) or a basket of currencies. The policy of floating has evolved to become one of the most important tools used by the monetary authorities to achieve their economic objectives. This policy is implemented through intervention measures, namely: influencing the money market by influencing the supply and demand movements by selling or buying the local currency, Discount or reduce it.

Article Credit: alnujaba.tv