Home » Currency Peg

Currency Peg

« Back to Glossary Index

A currency peg is a governmental policy of fixing the exchange rate of its currency to that of another currency, or occasionally to the gold price. It can sometimes also be referred to as a fixed exchange rate or pegging.

Usually, this kind of exchange rate policy allows a country’s domestic currency to fluctuate within a narrow range (usually between -1% to +1%) against the value of another currency.

Currency pegging is usually done by countries that wish to stabilize their global trade operations. By using a currency peg, the risk caused by exchange rate fluctuations of businesses involved in international trade is reduced.

This kind of exchange rate policy is very useful for countries with robust trade industries. China, the Bahamas, and the Marshall Islands have pegged their currencies to the U.S. dollar. Niger and Senegal have pegged their currencies to the French franc. Bangladesh, Czech Republic, and Thailand have pegged their currencies to a basket of several select currencies.

Related
Parabolic

Parabolic describes a market that moves a great distance in a very short period of time, frequently moving in an accelerating Read more

Bitcoin Block

Blocks are data structures within the blockchain database, where transaction data in a cryptocurrency blockchain are permanently recorded. A block records Read more

Monetary Policy

Monetary policy refers to the actions taken by a nation’s central bank to influence the availability and cost of money and credit to Read more

XM Bonus