Pegged exchange rate

Pegged exchange rate

Exchange rate whose value is pegged to another currency's value or to a unit of account.

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.
References in periodicals archive ?
Due to pegged exchange rate regimes, the modest increase in interest rates in the US beyond the first half of 2015 will result in higher domestic interest rates; however, the pass-through of policy rates to lending rates is generally weak in the GCC countries, and the impact of rising interest rates is likely to be limited.
The ratings are constrained by our view that the quality of Oman's public institutions and governance is moderate, that high fiscal, external and economic dependence on volatile hydrocarbons receipts will persist, and that monetary policy flexibility is limited by the (US dollar) pegged exchange rate," it said.
Indeed, the pegged exchange rate may flatter the level of income in dollar terms, as sizable current account deficits and very low inflation suggest slight overvaluation of the dirham.
The difference that is covered is the pegged exchange rate and the actual value of the currency vis a vis another currency,
Whereas devaluing currencies are an important driver of inflation in many MENA countries, the pegged exchange rate system in the GCC contributes to price stability.
First, the financial crises in emerging markets in the second half of the 1990s brought home the lesson that having a USD pegged exchange rate, and therefore US interest rates, didn't allow for the proper calculation of a risk-free interest rate.
One should exit a pegged exchange rate regime when economic conditions globally and domestically are favorable.
A pegged exchange rate, weak intellectual-property rights and policies that favor domestic industries over foreign bidders are eroding U.
He also called Paramov one of the "leading left-wing economists" who wanted to devalue the Bulgarian currency lev from the currently pegged exchange rate at EUR 1 = BGN 2, to four levs for one euro.
Because China is accumulating foreign currency reserves by running a trade surplus at a pegged exchange rate, the external deficit of trading partners is essentially Made in China by the PBC's exchange rate policy.
Monetary policy was confined to safeguarding the pegged exchange rate, with the exception of the devaluation of the Norwegian currency in 1986 following the decline in the price of oil (OPEC III).
The goals of maintaining a pegged exchange rate and keeping inflation very low sometimes conflicted, because Switzerland at times received large inflows of speculative capital.