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 ?
What crawling pegs attempt to achieve is to provide a nominal anchor (pre-announced path of the exchange rate) to focus inflationary expectations while accommodating inflation inertia.
Equation (3) defines the exchange rate regime of the country as a passive crawling peg.
Furthermore, it is widely argued in the literature that a high degree of exchange-rate flexibility, such as a managed float or crawling peg with wide bands, are helpful for absorbing both demand- and supply-side shocks in the economy (Halpern and Wyplosz, 1996).