Managed floating is an exchange rate system that has the features of both the flexible and fixed exchange rate systems. Under managed floating, exchange rate is basically determined by the market forces but in the case of extreme fluctuations, central bank makes interventions.
India’s exchange rate system is managed floating and it is a hybrid exchange rate system between floating and fixed. Here, the exchange rate is basically determined through the operation of market forces in the foreign exchange market. But at the same time, extreme fluctuations in the value of Rupee are corrected by the RBI through its invisible (unnoticed) interventions.
