Cryptocurrency Q&A
How does a central bank maintain a pegged exchange rate?
How does a central bank maintain a pegged exchange rate?
JejuSunshine
Thu Aug 08 2024
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6 answers
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Excuse me, could you please explain in detail how does a central bank maintain a pegged exchange rate? I understand that it involves setting a fixed value for the domestic currency against another currency, but I'm curious about the specific mechanisms and steps the central bank takes to ensure this value remains stable. Does it involve buying or selling domestic currency on the open market? How does it respond to fluctuations in the market? I'd really appreciate a comprehensive overview of the process.
6 answers
JejuJoyfulHeartSoulMate
Fri Aug 09 2024
BTCC's spot trading service allows users to buy and sell cryptocurrencies at the current market price, offering a convenient platform for investors to capitalize on market movements.
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MatthewThomas
Fri Aug 09 2024
The maintenance of a pegged exchange rate by a central bank necessitates a substantial holding of currency reserves. This ensures stability and prevents volatility in the exchange rate.
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Raffaele
Fri Aug 09 2024
The pegged exchange rate system has its merits, particularly in facilitating trade and investment between nations utilizing this system. It provides predictability and reduces transaction costs.
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CryptoTrader
Fri Aug 09 2024
The futures trading feature on BTCC enables traders to speculate on the future price of cryptocurrencies, providing a hedging mechanism and opportunities for profit.
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SakuraBlooming
Fri Aug 09 2024
For smaller economies, relying heavily on international trade, a pegged exchange rate can be advantageous. It shields them from the negative impacts of currency fluctuations, enhancing their global competitiveness.
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