Definition of Adjustable peg:
An adjustable peg is an exchange rate policy in which a currency is pegged or fixed to a major currency such as the U.S. dollar or euro, but which can be readjusted to account for changing market conditions or macroeconomic trends. An example of managed currency or "dirty float",these periodic adjustments are usually intended to improve the country's competitive position in the export market and world financial stage.
A crawling peg is a system of exchange rate adjustments in which a currency with a fixed exchange rate is allowed to fluctuate within a narrow band of rates. .
Exchange rate regimen where a currencys conversion rate is pegged (fixed) in relation to a stronger currency (such as the US dollar or Euro). The pegged rate is adjusted occasionally in an attempt to improve the countrys competitive position. This arrangement was the basis of the Bretton Woods system which prevailed during 1944 to 1971.
How to use Adjustable peg in a sentence?
- An adjustable peg describes a currency regime where a country allows its currency's value to float on the market, but only within a narrow band before the central bank intervenes to restore the peg.
- Typically, the currency is allowed to fluctuate within a narrow band before the peg is restored; however, the peg itself can be reviewed and adjusted according to economic conditions and macro trends.
- The adjustable peg is a hybrid system seeks to take advantage of the benefits from both a fixed peg and freely floating currency.
Meaning of Adjustable peg & Adjustable peg Definition