Currency Peg
A fixed exchange rate maintained by central-bank commitment, typically defended through foreign-exchange intervention and aligned monetary policy. Pegs can be hard (a statutory parity defended by a currency board or full dollarization) or soft (a target band defended with reserves and rate moves). Soft pegs have a poor historical track record under stress -- Bretton Woods 1971, sterling 1992, Mexican peso 1994, Thai baht 1997 all broke when underlying policies became inconsistent with the peg level.
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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