What is Currency Peg, Fixed exchange rate system and Currency basket.

Currency peg:

currency peg is a policy in which a national government or central bank sets a fixed exchange rate for its currency with a foreign currency or a basket of .

Why Would a Country Peg Their Currency

 

Currency Peg

The most common reasons include? encouraging trade between nations, reducing the risks associated with expanding into broader markets and stabilizing the economy.

Fixed exchange rate system: 


A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a basket of other currencies, or another measure of value, such as gold.

Currency Basket:

A currency basket is a portfolio of selected currencies with different weightings. A currency basket is commonly used by investors to minimize the risk of currency fluctuations and also governments when setting the market value of a country’s currency.

 

 

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