Crawling peg

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Related to crawling pegs: Adjustable Pegs

Crawling peg

An automatic system for revising the exchange rate. It involves establishing a par value around which the rate can vary up to a given percent. The par value is revised regularly according to a formula determined by the authorities.

Crawling Peg

A situation in which one currency links its value to that of another currency, but allows it to fluctuate within certain limits. This differs from a straight peg, which has one currency permanently valued at a certain amount in relation to another currency; it also differs from a floating currency, which changes in value according to market factors. A crawling peg may be valuable if a currency would otherwise be exceptionally volatile; it allows the currency to fluctuate to an acceptable level.
References in periodicals archive ?
Equation (3) defines the exchange rate regime of the country as a passive crawling peg. Parameter [phi] determines the extent to which devaluation compensates for past inflation, with [phi] = 0 corresponding to a fixed exchange rate regime and [phi] = 1 corresponding to real exchange rate targeting.
The actual choices may include using foreign currency as legal tender; introducing a currency board; announcing a peg to a foreign currency or a basket of currencies in a less rigid way; announcing a crawling peg with a particular rate of crawl; specifying a fluctuation band; combining the latter two arrangements in a crawling band; a managed float without specifying (or committing to) an exchange rate target; or an independent float.
Since the beginning of 1990 and until March 1995, it pursued an adjustable peg and since then a crawling peg. The country's central bank enacted a sharp 15 percent devaluation in January 1991.