Fixed Exchange Rate
An exchange rate regime in which the central bank commits to maintaining a specific rate against another currency, typically by intervening in foreign exchange markets and by aligning monetary policy with the anchor country. Hard pegs (currency boards, dollarization) surrender monetary independence entirely; softer pegs may allow narrow bands. Fixed regimes import the anchor countrys monetary policy stance, which is sometimes desirable (importing low inflation credibility) and sometimes destructive (inappropriate rate cycles for local conditions).
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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