Pegged Currency

A pegged currency is a type of currency that is tied or “pegged” to another stable currency, like the U.S. dollar or gold. This means that the value of the pegged currency is maintained at a fixed exchange rate relative to the reference currency. For example, if a country pegs its currency at 1:1 with the U.S. dollar, it will take steps to ensure that 1 unit of its currency is always worth 1 dollar. Pegging can help stabilize the economy by reducing exchange rate fluctuations, making trade and investment more predictable for businesses and consumers.