What is the meaning of Currency Pegging?

/in /by

A currency peg is a policy that stabilizes the exchange rate between countries by establishing a fixed exchange rate for a nation’s currency with a foreign currency or a basket of currencies. The value of one currency in comparison to another is known as the currency exchange rate. Some currencies are fixed and pegged to another currency, while others are free-floating and their rates change according to market supply and demand. For business planning, pegging provides long-term predictability of exchange rates and contributes to economic stability. What is the meaning of Currency Pegging?