Central Rate

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Central Rate

In the European Monetary System, an exchange rate for a currency relative to the European currency unit. Each currency is permitted to move within a narrow range of the central rate, making each currency in the European Monetary System a semi-pegged currency.
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He pointed out that the MPC may take a decision to stabilise or reduce the central rates of return, but, according to the current economic and financial data locally and externally, it is better for the CBE to pursue a progressive expansionary monetary policy and adopt a trend of reducing interest rates by 1% on Thursday.
"A file seeking an approval of central rates for the procurement of stents was forwarded to PHD, but due to its negligence and the sluggishness that mars its affairs, the process lies in limbo," sources said.
In addition to the central rates, the European Central Bank and the central banks of the three candidate countries have set an intervention limit, above which the national monetary authorities are obliged to intervene in order to protect the value of their currency.
In a bilateral agreement between the Netherlands and Germany - concluded in August 1993 when the Exchange Rate Mechanism (ERM) fluctuation margins were widened to plus/minus 15 per cent of the central rates - it was decided to keep the guilder-Deutschemark fluctuation margins unchanged at 2 1/4 per cent.
At the inception of EMU from 1 January 1999, a separate mechanism for exchange rate cooperation between the European Central Bank and national banks of non-participating countries will be set up, in most respects emulating the present ERM but based on central rates against the euro instead of the parity grid of the latter.
* The new exchange rate mechanism will be based on central rates against the euro.
In March, speculative attacks on the Spanish peseta in the context of more generalised exchange market turbulence led to a realignment of central rates in the European Exchange Rate Mechanism (ERM), including a reduction in the central value of the escudo by 3.5 per cent.
EMS member countries were allowed to change their central rates against one another when policy dissimilarities produced disequilibrium in their balance of payments.
Prior to this move, the EC finance ministers allowed seven of the nine currencies in the Exchange Rate Mechanism (ERM) to rise or fall as much as 15 percent above or below their "central rates" in contrast to the previous limit of 2.25 percent.
Britain entered the ERM on October 8, 1990, with fluctuation margins of |+ or -~ 6 percent around bilateral central rates, instead of the usual |+ or -~ 2.25 percent.(11) As with Italy and Spain before, and Portugal later, the ERM allowed wider margins to provide the newcomer some flexibility to adjust.
In the EMS, the ECU's main functions are as numeraire for setting central rates in the exchange rate mechanism, as the unit of account for operations under the intervention and the credit mechanisms, and as a reserve instrument and means of settlement among EMS central banks.
The corresponding ERM central rates are shown below the diagonal.

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