Clean Float

A clean float refers to an exchange rate system where a country's currency value is determined primarily by the foreign exchange market, with minimal government intervention. In this system, supply and demand for the currency set its price, allowing it to fluctuate freely within a flexible range. The goal is to let market forces establish a fair value, which can help with economic stability, adjust to external shocks, and avoid artificial distortions caused by government policies. Essentially, a clean float relies on the natural dynamics of the currency market to determine exchange rates without significant interference.