Dirty Float

Government intervention at its finest. Dirty float (a.k.a. managed float) occurs when a country’s government takes action to change currency rates. For example, a country may buy and sell currency or hike interest rates. Why? To protect value. Like global perception of a coup in Country A (that's literally the name of an olde country—like when they only had a few vowels) makes Country A's currency flag relative to those of the U.S. dollar, the euro, the pound. Were the float "clean," nothing would happen.

Perceptions would be what they are, and as rumors of Country A's theoretical coup go away, then Country A's currency would grow in strength. But if Country A feels like it needs a strong currency (like, to um, buy stuff from other countries), then its central bank may intervene and buy up its own currency, strengthening it and making it more globally competitive.

That's the theory in a dirty float, anyway—and it has happened in the past. The most famous example happened when the gaggle of European countries were all taking their own individual country's currencies and trying to peg them to the uniform euro. Currency traders punished them so badly that many had to go into the marketplace and buy back their own currencies...just so that they could kiss the bottom of the relative values they promised when converting to the euro.

Dirty pool. Dirty float.