Answer to Question #323274 in Macroeconomics for Aamna

Question

Fixing the value from one currency to another

Answer 1

A fixed or pegged rate is an exchange rate achieved by an economy fixing its value from one currency to another. An economy's rate is set against another major currency such as the US dollar or the euro. To maintain the local exchange rate, the government buys and sells its own currency on the foreign exchange market in return for the currency to which it's pegged.