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What is Currency Band

Exchange RateCurrency band is a very unique and effective type of exchange system used by some countries.In this type of currency exchange system country sets a range  for it currency.The currency of the country moves between this range.When currency moves out of this range,then central bank has to intervene to stabilize the exchange rate.In other words it is a mixture of both pegged and floating exchange rate systems.


According to the currency experts,this system is a very effective in stabilizing the currency, when it  is fluctuating and it needs short term stability.Some experts believe that this system is a very good way of  improving the capital control system of the country.

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