Hard Peg
What is Hard Peg?
A hard peg is an exchange rate regime in which the value of one currency is fixed in relation to another. For instance, the Chinese Yuan was set at 8.28 Chinese Yuan to one US dollar.
A currency’s value will vary in relation to other currencies in the same proportion if it is linked to another currency or a basket of currencies. A “band” is created by a hard peg, which restricts movement in reference to the pegged currency to a particular extent.
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