Managed Float
An exchange rate system where a currency floats freely but the central bank intervenes to dampen excessive volatility.
What is Managed Float?
A managed float (also called a dirty float) is an exchange rate system in which a currency's value is primarily determined by market supply and demand — as in a free float — but the central bank periodically intervenes by buying or selling foreign exchange to reduce excessive volatility or prevent the currency from moving too far from a desired range. Unlike a fixed peg, managed floats do not maintain a declared target rate; unlike a pure float, they do not allow completely unrestrained market determination. The IMF classifies many countries as having "managed floating" arrangements. Most large economies that nominally float their currencies engage in some degree of management in practice.
Example
Japan's yen officially operates as a floating currency, but the Bank of Japan and Ministry of Finance intervene periodically to address excessive yen movements. In October 2022, Japan conducted its largest-ever foreign exchange intervention — spending approximately ¥6.35 trillion — to halt the yen's rapid depreciation beyond ¥150 per dollar, illustrating the managed-float approach in practice.
Source: Bank of Japan — Foreign Exchange Intervention Operations