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IMF finds more countries adopting managed floating exchange rate system

TOKYO -- More countries are adopting a managed floating exchange rate system, especially as a number of emerging countries try to safeguard their currencies from increased volatility in foreign exchange markets triggered by monetary easing measures from advanced countries.

     In 2013, 82 countries and regions used the system, or 43% of all countries. This was up from 35% in 2009. This means more countries now use this system than do the floating exchange mechanism, according to a survey of 191 countries and regions by the International Monetary Fund.

     The managed floating system is equivalent to a middle ground between the floating system and the fixed system. China has adopted the managed floating mechanism, thereby limiting its currency moves to a certain range.

     The survey found that 65 of countries and regions, including industrialized nations such as Japan, the U.S. and many European countries, use the floating system, representing 34% of the total. This is down from the 2009 peak of 42%, or 79 countries and regions.

     A total of 25 countries and regions, including Hong Kong, use a fixed exchange rate system, in which their currencies are pegged to the U.S. dollar, according to the IMF.

     In 2012, Georgia, Papua New Guinea and several other countries switched to the managed floating system from the floating one. The IMF effectively categorizes Argentina under the managed floating system as it has conducted heavy currency interventions in recent years.

     Under the floating system, small economies are often subject to wild exchange rate swings due to a large influx and outflow of surplus money caused by monetary easing.


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