Suppose that a country follows a managed-float policy but that its exchange rate is currently floating freely.

Question:

Suppose that a country follows a managed-float policy but that its is currently floating freely. In addition, suppose that it currently has a massive current account deficit. Does it also have a balance of payments deficit? If it decides to engage in a currency manipulation in order to reduce the size of its current account deficit, will it buy or sell its own currency? As it does so, what will happen to its official reserves of foreign currencies? Will they get larger or smaller? And, finally, will the country have a balance of payments deficit while it is manipulating the Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...