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Crawling peg is a compromise between fixed & flexible exchange rate.
A fixed exchange rate system is one where the value of the exchange rate is fixed to another currency. This means that the government have to intervene in the foreign exchange market to maintain the fixed rate. The equilibrium exchange rate may be either above or below the fixed rate. In Figure 1 below, the equilibrium is above the fixed rate. There is a shortage of the national currency at the fixed rate. This would normally force the equilibrium exchange rate upwards, but the rate is fixed and so cannot be allowed to move. To keep the exchange rate at the fixed rate the government will need to intervene. They will need to sell their own currency from their foreign exchange reserves and buy overseas currencies instead. This has the effect of shifting the supply curve to S2 and as a result, their foreign currency holdings will rise.
Fixed Exhange-Rate System: currency system in which governments try to keep the values of their currencies constant against one another Flexible Exchange- Rate System: allows the exchange rate to be determined by supply and demand. With a flexible exchange- rate system, exchange rates need not fall into any prespecified range.
An international business will operate more easily in a fixed exchange rate system. Knowing what the equivalency of goods will allow for predetermined forecasting, however, a fixed rate decreases the opportunity for profits.
A flexible exchange rate system allows for fluctuations in currency values on a day-to-day basis. Another kind of system would be a fixed exchange rate system.
A fixed exchange rate system is where 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. 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. however I'm not sure what a currency board system is....sorry.
This led to a managed flexible-exchange-rate system with agreement among major countries that they would try to coordinate exchange rates based on price indexes.
The fixed-exchange-rate system collapsed.
In a floating exchange rate system, the rates keep on changing according to the economic conditions. The rates of the currencies are never fixed.
It is a combination of fixed and flexible exchange rate, thsi system hanges par values of currency by small amount at frequent specified intervals
No.
fixed rate