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 ?
The best case scenario is to abolish the fixed exchange rate as soon as possible, irrespective of our financial standing.
The sustainability of the fixed exchange rate currency systems in the GCC is starting to be questioned, due to the weakness of oil prices.
Joint activities of social assistance institutions and labor market institutions - pilot "6 people - English course for beginners in the form of a fixed exchange rate including 100 hours of teaching (teaching hour is equal to 45 minutes) and 3 people - German language course for beginners in the form of a fixed exchange rate covering 100 hours of teaching (teaching hour is equal to 45 minutes).
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.
2 million), at fixed exchange rates a decline of 0.
Similarly, a fixed exchange rate is also viewed as the measure to equalize interest rates across borders as shown by the interest rate parity equation: R = R* + [E.
Countries implementing fixed exchange rates regime had been affected more by economic crisis than countries which implemented floating exchange rates regime, he said.
According to Gosev, the fixed exchange rate suits Macedonia as an open economy.

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