Banking expert explains differences between clean and dirty float

Banking expert Hany Abul-Fotouh explained that the exchange rate policies followed globally involve either linking the country’s currency to another or a basket of currencies, or by devaluation.

Abul-Fotouh added that a clean float of currency means leaving the currency price to be determined by supply and demand in the market without any intervention from the Central Bank, and the exchange rate may witness high fluctuations during transactions with high freedom of capital movement.

He continued: “Managed or dirty floating refers to the intervention of the Central Bank in the market to determine a specific range for the currency price, and it buys or sells the currency to maintain this range. Transactions, according to this policy, are characterized by limited fluctuations and some restrictions on the freedom of movement of capital.”