fixed exchange rate

(redirected from Fixed Exchange)

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.

Fixed Exchange Rate

An exchange rate for a currency where the government has decided to link the value to another currency or to some valuable commodity like gold. For example, under the Bretton Woods System, most world currencies fixed themselves to the U.S. dollar, which in turn fixed itself to gold. A government may fix its currency by holding reserves of the peg (or the asset to which it is fixed) in the central bank. For example, if a country fixes its currency to the British pound, it must hold enough pounds in reserve to account for all of its currency in circulation. Importantly, fixed exchange rates do not change according to market conditions. It is also called a pegged exchange rate.

fixed exchange rate

An exchange rate between currencies that is set by the governments involved rather than being allowed to fluctuate freely with market forces. In order to keep currencies trading at the prescribed levels, government monetary authorities actively enter the currency markets to buy and sell according to variations in supply and demand. Compare floating exchange rate. See also devaluation.
References in periodicals archive ?
Dow shareholders will receive a fixed exchange ratio of 1.
Pursuant to the merger agreement, Dow shareholders received a fixed exchange ratio of 1.
South Sudan floated the fixed exchange rate in December 2015 and there is no official foreign currencies rate set by the government since then.
JEDDAH: Saudi Arabia is committed to keeping the riyal pegged to the US dollar and that it has "sufficient tools" to support its fixed exchange rate policy, said Ahmed Al-Kholifey, governor of Saudi Arabian Monetary Agency (SAMA), on Friday.
The bank said that it is committed to keep the riyal pegged to the US dollar and that it had 'sufficient tools' to support its fixed exchange rate policy.
Moreover, recent experiences (such as the Argentinian crisis in 1975, European Monetary System in 1992, Mexico in 1994, Southeast Asia in 1997, Russia in 1998, Argentina in 2002, Iran in 2012 and Russia in 2014) have shown the increasing difficulty countries face in building the reputation needed to sustain a fixed exchange rate system.
The sustainability of the fixed exchange rate currency systems in the GCC is starting to be questioned, due to the weakness of oil prices.
Exchange rate regime Asked about any plan to change the fixed exchange rate regime, he said, "There is no plan for the time being to change the exchange rate regime.
Latvia moved a step closer to becoming a full participant in Europe's Economic Monetary Union (EMU) Tuesday as the European Central Bank approved a fixed exchange rate from lats to euros .
Fixed exchange rate: Qatar's fixed exchange rate provides stability and encourages foreign investment, QNB said.
However, it will organise a gathering for experts, economists and bankers to voice their views on the advantages and disadvantages of the floating and fixed exchange rate regimes.
According to Friedman (1953), a flexible exchange rate regime facilitates current account adjustment while a fixed exchange rate regime delays the adjustment process.

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