Would the central bank need to intervene in a managed floating system? Explain why.
Yes, the central bank needs to intervene in a managed floating system. This system is a mixture of a flexible exchange rate system (the float part) and a fixed rate system (the managed part).
The central bank intervenes to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate. This system is also called dirty floating. Since the central bank actively intervenes, official reserve transactions are not equal to zero.
Explanation
The answer is derived directly from section 6.2.4 'Managed Floating' in the provided context. It highlights that this system combines features of both flexible and fixed exchange rates. The central bank's role is to moderate exchange rate movements through intervention, distinguishing it from a purely flexible system where official reserve transactions would be zero.