Managed currency definition
/What is a Managed Currency?
A managed currency is a currency for which the exchange rate is controlled by a government’s central bank. The government does so by either setting a fixed exchange rate or by engaging in buying and selling transactions through its central bank. Even when a government claims to be letting its currency's exchange rate rise and fall in accordance with the forces of supply and demand, it may be making occasional interventions to stymie unusual exchange rate fluctuations, thereby reducing the level of uncertainty in the financial markets. Some currency management is considered normal, in order to stabilize markets.
Advantages of a Managed Currency
There are several advantages to having a managed currency. First, it results in a reasonable amount of exchange rate stability. This reduces exchange rate risks for foreign businesses that might want to engage in trade within a country, or invest there. Similarly, it reduces the risk of having any sudden spikes or drops in the exchange rate, which might scare off investors and businesses.