The formal adoption and widespread implementation of the floating exchange rate system began after the dollar crisis further intensified in the late 1970s.

Floating exchange rate systems can be divided into free floating (also known as "clean floating") and managed floating (also known as "dirty floating") according to whether the state intervenes in the foreign exchange market.

In fact, no international market implements complete free floating today, and major developed countries all intervene in the foreign exchange market to varying degrees.

There are currently many forms of managed floating exchange rate systems, which can be divided into independent floating and joint floating, and some floating exchange rate systems that implement pegged policies.

Under a floating exchange rate system, changes in a country's exchange rate are affected by a variety of factors. In addition to economic factors that often play a role, political and psychological factors are also included.

The main advantages of a floating exchange rate system are to prevent the impact of international hot money and avoid the outbreak of currency crises; it is conducive to promoting the growth of international trade and the development of production; it is conducive to promoting capital flows, etc.

The disadvantage is that it often leads to fluctuations in the foreign exchange market, which is not conducive to long-term international trade and international investment; it is not conducive to the stability of the financial market; the IMF's supervision of exchange rates is difficult to achieve, and the imbalance of the international balance of payments remains unresolved; it is also detrimental to developing countries.

The country is even more disadvantaged.

A floating exchange rate system means that a country's central bank does not set the official exchange rate between its own currency and other countries' currencies, allowing the exchange rate to be determined spontaneously by the foreign exchange market.

Under a floating exchange rate system, the main factors that affect the exchange rate include: the value represented by the currency itself, a country's international balance of payments, interest rates, intervention in the foreign exchange market by governments and central banks, politics, psychology, speculation and other factors.