A floating exchange rate regime is one
This is an exchange rate regime where the value of a currency is allowed to be determined solely by the demand for and supply of the currency on the foreign exchange market. In a floating regime do governments intervene at all to control the exchange rate. Thus, a floating exchange rate allows a government to pursue internal policy objectives such as full employment growth in the absence of demand-pull inflation without external constraints (such as debt burden or shortage of foreign exchange). 3.