Clean Float

DEFINITION of 'Clean Float'

Also known as a pure exchange rate, a clean float occurs when the value of a currency, the exchange rate, is determined purely by supply and demand. Clean floats can only exist where there is no government interference, as would be the case in a purely capitalistic economy. Clean floats are a result of Laissez-Faire or free market economics.

BREAKING DOWN 'Clean Float'

A clean float is the opposite of a dirty float, which occurs when government rules or laws affect the pricing of currency. Virtually none of the currencies in the western world float cleanly, without support or some other form of relationship with a central bank. Swiss francs, German marks and Canadian dollars tend to be among the "cleanest" of the western currencies.

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RELATED FAQS
  1. What does floating stock tell traders about a particular stock?

    Learn about what floating stock tells a trader about a particular stock. One commonality of the biggest winners in stock ... Read Answer >>
  2. How does float affect the nation's money supply?

    Learn how float affects the appearance of the nation's money supply, and receive a brief lesson on how the U.S. government ... Read Answer >>
  3. Why does float usually increase at the beginning of the week?

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  4. What months of the year typically have the highest float?

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  5. What is the difference between holdover float and transportation float?

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