There are two forms of currency float
Pure flotation:
or as it is called free flotation, which is complete freedom to change and determine the exchange rate over time according to the mechanism of supply and demand and market forces without state intervention in anything other than that the monetary authorities intervene to influence the speed of exchange rate change only without interfering in limiting it Change. This free-floating currency approach is followed in some developed countries with an industrial capitalist system, such as the Swiss franc and the US dollar.
Directed Flotation:
Or as it is called managed float, which is the freedom to determine the exchange rate according to the mechanism of supply and demand and market forces. The state intervenes in this type of float through its central bank when there is a need to direct the exchange rate in specific directions against other currencies. In response to some indicators that include the rate of gap between supply and demand in the currency exchange market, developments in similar exchange rate markets and forward and spot levels of currency exchange rates. The exchange rate of its currency in pounds sterling, French francs (formerly), the US dollar, or even a basket of currencies.