Depeg

(redirected from De-Pegging)

Depeg

To remove a previously instituted peg on a currency. For example, if Currency A is pegged to Currency B at a 1:1 ratio, but the central bank for Currency A decides to let it float, it is said to be depegged from Currency B. Depegging may occur if the peg is causing inflation or if the central bank is unable to sustain the peg for other reasons.
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Nevertheless, the government's need for reform is very urgent and a continued deterioration of the fiscal outlook could precipitate a forced market adjustment that would reveal itself in a currency depreciation and de facto de-pegging of the lira from the dollar.
Standard CharteredEe's base-case scenario still excludes a credit event and potential de-pegging. While QatarEe's support through a US$ 500 million purchase of Lebanon Eurobonds is not enough to arrest the overall deterioration, it is a positive turn of events, particularly combined with Saudi ArabiaEe's verbal show of support for Lebanon at Davos.
With hydrocarbon still accounting for an overwhelming majority of exports, de-pegging would carry limited benefits in terms of boosting external competitiveness, the Fitch Group company said.
However, Mr Cowan said any de-pegging would be "very unlikely", particularly in light of a resurgence in the oil price - which reached its highest levels since 2014 this month and now sits above $80 per barrel.
However, they are expected to rely on fiscal consolidation measures to protect their balance of payments as they run the risk of having fluctuations in oil revenue if they take the de-pegging route to have greater control over their interest rates.
According to the IIF, while there would be some benefit from a significant devaluation or de-pegging in the form of boosting oil revenue in local currency, the short-term costs of de-pegging would be significant.
It's not the Swiss central bank de-pegging their currency.
Now, Egypt is navigating its own liquidity crunch and budget woes-and just might make the same de-pegging decision in the near future.
While de-pegging would generate greater government revenues by lifting the dollar oil revenues in local currency terms, it would also impose heavy costs, including rising inflation, a loss of policy credibility and additional volatility in oil revenues.
De-pegging the yuan to the dollar is by way of preparation for the Fed rate increase in the following days, and gives the yuan more flexibility to move away against the dollar.
Petroleum engineer Waleed Al-Halw said that he believes oil and dollar are indispensible and none would risk to de-pegging oil to dollar due to the strength of this currency on the international markets.
"I cannot see the dirham de-pegging from the dollar in the foreseeable future.