fixed exchange rate

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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).
A spokesperson for the bank said, 'We have the necessary instruments in the form of interest rate changes and intervention to maintain the fixed exchange rate and we at all times look at market conditions and determine what to do.
He took the opportunity to reiterate that the responsibility for fixing and safeguarding the dirham's official exchange rate is that of the Central Bank and repeated that the fixed exchange rate of the dirham to the dollar will continue.
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 .
Coinage gold is part of the international reserves of Bulgaria, which ensure the currency board and the fixed exchange rate of the Lev to the euro.
Fixed exchange rate: Qatar's fixed exchange rate provides stability and encourages foreign investment, QNB said.
According to Friedman (1953), a flexible exchange rate regime facilitates current account adjustment while a fixed exchange rate regime delays the adjustment process.
A fixed exchange rate offers several clear advantages.
If this seems like a distinction without a difference, consider that while Sofia's news this week means it's opting against joining the official European Exchange Rate Mechanism, it is maintaining its fixed exchange rate to the euro.

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