Questions tagged [pegged exchange rate]

Giulia Tue Nov 19 2024 | 5 answers 1152

I want to understand why a pegged exchange rate is considered unfavorable. What are the negative impacts or consequences associated with it?

Maria Thu Aug 08 2024 | 7 answers 1360

As a curious investor, I am wondering about the potential drawbacks of a pegged exchange rate system. Could you elaborate on some of the weaknesses or challenges that such a system might face? For instance, how does it impact a country's monetary policy flexibility and its ability to respond to economic shocks? Additionally, what are the risks associated with maintaining the peg, and how might a sudden devaluation or revaluation impact market sentiment and investor confidence?

noah_wright_author Thu Aug 08 2024 | 0 answers 0

How does a pegged exchange rate function exactly? Could you elaborate on the mechanisms involved in maintaining such a stable rate between two currencies? Does it rely on government intervention or market forces? What are the benefits and drawbacks of using a pegged exchange rate system? Is it easier to predict and manage fluctuations in exchange rates with a pegged system compared to a floating exchange rate? Lastly, how does a country go about changing its exchange rate regime from floating to pegged, or vice versa?

JejuSunshine Thu Aug 08 2024 | 6 answers 1418

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.

GyeongjuGlorious Wed Aug 07 2024 | 6 answers 1395

Could you please explain what a pegged exchange rate is? I'm curious to understand how it differs from a floating exchange rate and what are the advantages and disadvantages of using a pegged exchange rate system. Additionally, could you provide some examples of countries that have implemented a pegged exchange rate system in the past or present?