Currency Pegging
Currency Pegging Meaning:
In foreign exchange terminology, currency pegging involves a country not allowing the value of its currency to change significantly versus another currency. Often, the country’s central bank will intervene as necessary to sustain the fixed rate and to take up any excessive supply and demand so that the exchange rate maintains a narrow range.
In foreign exchange terminology, currency pegging involves a country not allowing the value of its currency to change significantly versus another currency. Often, the country’s central bank will intervene as necessary to sustain the fixed rate and to take up any excessive supply and demand so that the exchange rate maintains a narrow range.
Currency pegging, where a country maintains a fixed exchange rate for its currency against that of a major trading partner, permits companies involved in international commerce to enjoy greater certainty when it comes to the value of their import/export deals. Such a policy can also help the country keep inflation under control and tends to support cross-border investment.