Crawling peg

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Related to Crawling Peg Exchange Rate: Crawling Peg System

Crawling peg

An automatic system for revising the exchange rate. It involves establishing a par value around which the rate can vary up to a given percent. The par value is revised regularly according to a formula determined by the authorities.

Crawling Peg

A situation in which one currency links its value to that of another currency, but allows it to fluctuate within certain limits. This differs from a straight peg, which has one currency permanently valued at a certain amount in relation to another currency; it also differs from a floating currency, which changes in value according to market factors. A crawling peg may be valuable if a currency would otherwise be exceptionally volatile; it allows the currency to fluctuate to an acceptable level.
References in periodicals archive ?
In periods of financial crises the central bank has to defend the crawling peg (in a crawling peg exchange rate system) or tends to contain the rising of the exchange rate (in a dirty floating exchange rate system) by selling dollars (reasing the international reserves), while the C-bond spread is rising.
This, combined with the country's crawling peg exchange rate regime, limited 'usable' international reserves as well as a relatively weak banking sector have increased the vulnerability of Costa Rica to external shocks.
The Negative Outlook reflects the high fiscal deficits and high level of dollarization of the banking system in the context of a crawling peg exchange rate regime that increases Costa Rica's financial vulnerability.
The negative outlook reflects fiscal slippage in recent years, which, in the context of a crawling peg exchange rate and increasing dollarization of the banking sector, has increased Costa Rica's financial vulnerability.
Venezuela's current macroeconomic policy framework - characterized by policy stimulus in the context of a crawling peg exchange rate - is hitting its limits, as lower oil prices and capital flight (resulting from concerns about domestic politics and economic policy) pressure reserves.