Globally, currency float has been a failure in most countries
China, India benefit most from freely floating exchange rate regime, largely due to high exports and cheap product prices
Out of eight previous international experiences in which a country had opted for a floating currency exchange and removed its peg to the US Dollar, only two countries have managed to make a success out of such a move.
China and India benefited the most from the freely floating exchange rate regime, largely due to high exports and the cheap prices of their products, thus boosting demand externally and locally. Also, the low exchange rate for the local currency helped lure more foreign investment.
Below is a look at countries who have gone ahead with the currency float and those thinking on those lines.
The country implemented the floating exchange rate regime in 1999 in light of its flagging economy, a step that led to the diving of the Real value, which started recovering following economic reforms initiated by then President, Lula da Silva.
Argentina allowed the Peso to start trading freely in 2015 a devaluation that fulfils a key component of President Argentine President Mauricio Macri campaign.
Since the end of 2015, the Governor of the Central Bank of Morocco, Abdul Latif al Jawahiri, has hinted at the government’s intention to move towards a flexible exchange system.
Central Bank floated the exchange market in phases, and the current exchange rate is 15.9 Sudanese Pound against the dollar.
In 2005, Malaysia scrapped the Ringgit peg to the dollar in order to allow their currency to operate in a managed float against the several major currencies.
Last June, Nigeria started allowing its struggling currency, the Naira, to trade freely in a move to tackle its financial crisis.
Central Bank floated the pound on Thursday in a move aimed to lure foreign capital. The surprise step is the first for the Egyptian currency since the era of the late President Anwar al-Sadat.