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Exchange Pegging (Unilateral Methods)

>> Sunday, September 27, 2009

Exchange pegging means the act of fixing the exchange value of the currency to some chosen rate. When the exchange rate is fixed higher than the market rate (overvaluation), it is called pegging up. When the exchange rate is fixed lower than the market rate, it is called pegging down (undervaluation). The exchange pegging is a temporary measure to remove fluctuations in the foreign exchange rate.

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