8 Views

Question : What is the term used to describe the exchange rate regime where a currency's value is fixed to another currency or a basket of currencies?

Option 1: Floating exchange rate
 

Option 2: Managed float exchange rate
  

Option 3: Pegged exchange rate

 

Option 4: Currency board arrangement


Team Careers360 22nd Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Pegged exchange rate


Solution : The correct answer is c) Pegged exchange rate

The term used to describe the exchange rate regime where a currency's value is fixed to another currency or a basket of currencies is a pegged exchange rate. In a pegged exchange rate system, the value of a country's currency is set and maintained at a specific rate in relation to the chosen reference currency or currencies.

Under a pegged exchange rate regime, the central bank or monetary authority of a country intervenes in the foreign exchange market to buy or sell its currency to maintain the fixed exchange rate. This intervention involves adjusting the supply and demand for the currency to ensure its value remains aligned with the reference currency or currencies.

Pegged exchange rate regimes can take various forms, such as a fixed peg to a single currency, a crawling peg where the exchange rate is adjusted periodically, or a basket peg where the currency is fixed to a basket of currencies.

Related Questions

Chandigarh University Admissi...
Apply
Ranked #1 Among all Private Indian Universities in QS Asia Rankings 2025 | Scholarships worth 210 CR
Amity University, Noida Law A...
Apply
700+ Campus placements at top national and global law firms, corporates, and judiciaries
Amity University, Noida BBA A...
Apply
Ranked amongst top 3% universities globally (QS Rankings)
UPES | BBA Admissions 2025
Apply
#41 in NIRF, NAAC ‘A’ Grade | 100% Placement, up to 30% meritorious scholarships | Last Date to Apply: 28th Feb
MAHE Manipal M.Tech 2025
Apply
NAAC A++ Accredited | Accorded institution of Eminence by Govt. of India | NIRF Rank #4
Sanskriti University LLM Admi...
Apply
Best innovation and research-driven university of Uttar Pradesh
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books