In this article, We learn about “A currency peg “.Let’s Go!
A A currency peg is a government policy that fixes the exchange rate of one’s currency to that of another currency, and sometimes the price of gold.
is sometimes referred to as fixed exchange rate or pegged .
A currency peg is an exchange rate policy in which the value of a country’s domestic currency relative to another is only allowed to fluctuate within a narrow range (usually between -1% and +1%).
Currency pegs are typically undertaken by countries wishing to stabilize their global trade operations.
By pegging the currency, the risks caused by exchange rate fluctuations for companies involved in international trade are reduced.
This exchange rate policy is very useful for countries with developed trade industries.
China, the Bahamas and the Marshall Islands have pegged their currencies to the U.S. dollar.
Niger and Senegal have pegged their currencies to the franc.
Bangladesh, Czech Republic and Thailand have pegged their currencies to a basket of several selected currencies.
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