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fixed exchange rate |
Also found in: Wikipedia | 0.10 sec. |
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Fixed Exchange Rate A country's exchange rate regime under which the government or central bank ties the official exchange rate to another country's currency (or the price of gold). The purpose of a fixed exchange rate system is to maintain a country's currency value within a very narrow band. Also known as pegged exchange rate. Notes: Fixed rates provide greater certainty for exporters and importers. This also helps the government maintain low inflation, which in the long run should keep interest rates down and stimulate increased trade and investment. See also: Bretton Woods Agreement, Central Bank, Currency, Export, Import, Inflation, Interest Rate, Trade Fixed exchange rate A country's decision to tie the value of its currency to another country's currency, gold (or another commodity), or a basket of currencies.
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| The government brought spending in line with revenues and moved away from fixed exchange rates, allowing the Indian currency to reflect world prices. Even under fixed exchange rates it is therefore likely that trade imbalances will disappear over time. Such a view must have seemed then like an academic curiosity, the academy said, because at the time all countries were linked together by fixed exchange rates within the so-called Bretton Woods System. |
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