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RBA Glossary definition for floating exchange rate
floating exchange rate – Exchange rates determined by market forces based on the demand for and supply of a currency.
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Capital Flows and Exchange Rate Determination
1 Dec 1989
RDP
8908
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1989/8908.html
Capital Movements
1 Dec 1989
RDP
8908
The Exchange Control Department of the Reserve Bank was abolished. Australia can now be classified, with only minor qualification, as a country with a freely floating exchange rate and perfect capital ... However, in periods when interest rates rose in
https://www.rba.gov.au/publications/rdp/1989/8908/capital-movements.html
References
1 Dec 1989
RDP
8908
COE, D.T. and GOLUB, S.T. (1986), “Exchange Rates and Real Long-Term Interest Rate Differentials: Evidence for Eighteen OECD Countries”, OECD Working Paper, February. ... and LOOPESKO, B.E. (1983), “Floating Exchange Rates after Ten Years”,.
https://www.rba.gov.au/publications/rdp/1989/8908/references.html
Appendix
1 Dec 1989
RDP
8908
rates and the exchange rate. This was not the case in the monthly equations. ... t,k. is a white noise process. One of the stylised facts of the international experience with floating exchange rates is that uncovered interest parity does not hold.
https://www.rba.gov.au/publications/rdp/1989/8908/appendix.html
Implications for Monetary Policy
1 Dec 1989
RDP
8908
this relationship cannot be established econometrically, the above conclusions are reasonably standard for a country with a floating exchange rate. ... In a country with a floating exchange rate and interest sensitive capital movements, there is scope
https://www.rba.gov.au/publications/rdp/1989/8908/implications-for-monetary-policy.html
Monetary Management in the Post-Float Period
1 Dec 1989
RDP
8908
Figure 3. INTEREST RATES & THE EXCHANGE RATE. in the first half of 1985, when the Australian dollar fell sharply, monetary policy was tightened. ... Thus, from late 1987 to early 1989, rises in interest rates tended to be accompanied by rises in the
https://www.rba.gov.au/publications/rdp/1989/8908/monetary-management-in-the-post-float-period.html
Exchange Rate Determinants
1 Dec 1989
RDP
8908
The more interesting link for our purposes is the shorter-run relationship between interest rates and the exchange rate. ... One explanation for this result lies in the two-way relationship between interest rates and the exchange rate.
https://www.rba.gov.au/publications/rdp/1989/8908/exchange-rate-determinants.html