The proposal that official intervention in foreign exchange markets should take the form of limiting the rate of change of exchange rates, as opposed to setting any particular level. A ‘crawling peg’ could take several forms, among them the following. The authorities could pre-announce a trend rate of movement in par exchange rates by small regular changes in the same direction, for example 1/2 per cent a month. They could retain discretion to change par rates in either direction by up to a low limit, for example 1 per cent a month. Alternatively, they could announce that the par rate would be continually adjusted to be equal to the average of market rates over some period of the past, for example a year. In all cases it is assumed that market rates would be held within fixed limits around the par rates by intervention in the market. The merit of crawling peg systems is that if they succeed in avoiding the need for large sudden jumps in exchange rates, they reduce the profits to be made from speculation. Their disadvantage is that if exchange rates start a long way from equilibrium, the limited rate of adjustment may be too slow to bring market rates near to equilibrium levels before foreign exchange reserves run out.

• UNDP
• unearned income
• unemployable
• unemployment
• unemployment benefit
• unemployment rate
• unexpected inflation
• unfair competition
• unfair dismissal
• unfunded pension scheme
• unified budget
• uniform business rate
• uniform distribution
• union
• unionized
• union/non-union wage differential
• unitary taxation
• United Nations Conference on Trade and Development
• United Nations Development Programme
• unit elasticity
• unit-free measure
• unit of account
• unit root
• unit trust
• universal benefit