Fixed Exchange Rate
A country's exchange rate regime under which the government or central bank ties the official exchange rate to another country's currency (or the price of gold). The purpose of a fixed exchange rate system is to maintain a country's currency value within a very narrow band. Also known as pegged exchange rate. Investopedia Says:
Fixed rates provide greater certainty for exporters and importers. This also helps the government maintain low inflation, which in the long run should keep interest rates down and stimulate increased trade and investment. Related Terms:
Big Mac PPP
Bretton Woods Agreement
Central Bank
Crawling Peg
Currency
Dirty Float
Dual Exchange Rate
Floating Exchange Rate
Interest Rate
Pegging |