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Question : What is the term used to describe a situation where a country's central bank fixes the value of its currency to another currency at a specified exchange rate?

Option 1: Currency intervention
  

Option 2: Currency hedging
 

Option 3: Currency manipulation

   

Option 4: Currency pegging


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Currency pegging


Solution : The correct answer is d) Currency pegging

Currency pegging refers to a situation where a country's central bank or monetary authority fixes the value of its currency to another currency, often a major currency like the US dollar or the euro, at a specified exchange rate. The purpose of currency pegging is to maintain stability in the exchange rate and provide a predictable environment for international trade and investment. The central bank intervenes in the foreign exchange market as needed to ensure that the currency remains within the specified exchange rate range.

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