Managed Currency

A managed currency can be defined as a currency foreign or local whose exchange rates can be affected and can be changed by the intervention of a third party such as central bank. This concept is opposite the determining price of those currencies where exchange rates becomes low or high depending upon demand and supply of the currency in the world market. However if we see and find in the virtual sense no currency falls in the latter category. Almost all the major currencies of the world are managed up to some extent or up to some level. This management is done as the sales purchase of these currencies is done through the central banks of different countries so they have to determine exchange rates accounting their country and their own currency that is the local currency. With the help of exchange rate management of different currencies the central bank of a country tends to stabilize the market and also make stability in their monetary principles and policies.

The exchange rate of managed currency cannot be determined by free market forces on the biases of supply and demand. The purchase price of the currency is determined only through the monetary authorities of the country such as central bank or government financial institutions. In contrast to the management of the exchange rate of the currency the exchange rate is settled by using quasi automatic gold standard. The exchange rate of managed currency tends to change and fluctuate from day to day.

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