*2.2.3 Managed float rate of exchange regime*

In the managed float exchange rate regime, there is active intervention from the monetary authority in the market that deals on exchange of the domestic currency

with foreign currencies, and this is not subject to any preannounced path for the policy as regards the adopted rate of exchange regime. Under the managed float exchange rate regime, the monetary policy is said to be relatively independent. Monetary policy here serves to move the economy in the desired direction; hence exchange rate can be used as an instrument of monetary policy. Alade [12] observed that the limited flexibility of managed float "permits partial absorption of adverse shocks and that it can also maintain stability and competitiveness if the regime is credible, as it is less vulnerable to currency crises". But in practice, "no exchange rate is 'clean or pure float,' that is a situation where the exchange rate is left completely to be determined by the market forces of demand and supply"; yet the existing regime is a managed float, in which a country's monetary authorities get involved the dynamics in country's foreign exchange market in an attempt to accomplish very important economic objectives [15, 16]. According to Heipertz [17], "exchange rate is adjusted by the central bank like the use of the interest rate as an operating instrument."
