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Pegging is a method of fixing a country's currency to stay at a certain rate below or above Another Country's currency. Pegging is characterized by having a fixed exchange rate. When a country pegs their money to a commodity - gold, silver, uranium - The value of the currency would then be in direct proportion to the value of the commodity. A country can have control of its currency by trading it in the world exchange market: if the exchange rate is too low, they can sell some of their currency; if the exchange rate is too high, then exports are reduced and the likely result is a recession; this is happening in South East Asia. In 1995, the US dollar began to rise in value. Many of the Asian countries had currencies pegged to the American dollar. When the dollar rose, the value of the Asian currencies rose correspondingly. However, this caused the inflation rates to rise considerably in the Asian markets. As a consequence, exchange rates rose and the Asian countries fell into recession. As of June '98, the Hong Kong currency has been pegged to the US dollar; this has helped Hong Kong survive the Asian Crisis because their currency has not dropped extensively. However, their peg may have to be dropped due to inflation and rising costs of real estate. Most developing countries will peg their currency to help them get started. Importantly, they have also to agree to trade their currency at any given time with the country they are pegged to.
What else can I help you with?
Drop in value of a currency pegged to gold or another currency?
Devaluation
What best explains what happens when a currency is pegged to the us dollar?
The value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar. ALSO Pegging a currency to the U.S. dollar gives that currency the same stability as the U.S. dollar, keeping its exchange rate from fluctuating too wildly.
Morocco dirham pegged with which currency?
The Morocco Dirham (MAD) is a fully convertible currency.
Is currency that is pegged to another currency usually changed on a supply-and-demand basis?
Usually it is not changed as it is 'pegged'. However, it mey be altered in the value because of government action, often politically driven.
What currencie does Denmark have?
The currency of Denmark is the Danish krone. The Danish krone is pegged with the Euro, but is a sovereign currency.
What happens when a currency is pegged to the U.S dollar?
The value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar. Pegging a currency to the U.S. dollar gives that currency the same stability as the U.S. dollar, keeping its exchange rate from fluctuating too wildly.
What currency do they use in Cambodia?
Riel, pegged to the dollar, it sits at around 4000r to $1US.
What is the type of currency exchange rate system in which values stay constant?
A currency whose value is fixed either to the value of another currency, or to the value of gold, is called a "pegged currency"
What is a currency whose value is determined by the supply and demand for the currency in the market?
Pegged currency ^For me on apex 2022 :)
What is the difference between a floating and a pegged exchange rate?
pegged exchange rate is officially fixed in terms of gold or any other currency in foreign exchange. Floating exchange rate is flexible rate in which value of currency is allowed to adjust freely determined by the supply & demand of foreign exchange
What is peg regulus?
Peg regulus refers to a type of pegged currency system where a country's currency value is fixed to another stable currency or a basket of currencies. This system aims to stabilize the exchange rate and reduce volatility, making international trade more predictable. While peg regulus can provide short-term stability, it can also lead to economic challenges if the pegged currency fluctuates significantly or if domestic economic conditions diverge from those of the anchor currency.
What is currency of Bhutan?
This is a great question for those trivia parties: answer - the ngultruns
