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Fixed Exchange Rate

Exchange RateA pegged exchange rate or fixed exchange rate is a kind of exchange rate system in which value of one currency is fixed against the value of another currency or many other currencies. It is adopted by the countries to stabilize the economy and also the value of that one currency against other currency or currencies.By adopting this exchange rate regime some countries feel comfortable to do trade between themselves .


According to currency analysts,sometimes this tactic is  very successful and effective in controlling inflation in pegged currency areas.But sometimes this exchange rate regime prevents countries to achieve macroeconomic stability.

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