Float Range
The range within which international
exchange rate may freely move when the international exchange policy is governed by a collar and floors mechanism. If the exchange rate coincides with the collar or floor of the Range, the exchange policy becomes become a fixed exchange rate one. Thus, if the rate of exchange is over the collar, the Central Bank sells
currency so that the collars goes down into the
price range. If the rate of exchange is below the range floor, the Central Bank buys currency so that the rate of exchange goes up towards inside the range.
