Fixed Exchange Rate
A fixed exchange rate is an alternate option that some governments use instead of leaving their currency exchange exposed to macro-economic market forces. Some nations choose to control the exchange rate of their currency against outside monetary units. For example, a Cuban Convertible Peso is fixed to equal one American dollar.
Another term for this is a currency peg; the Chinese government pegs their currency against the US dollar, seeking to maintain a stable, consistent exchange rate. This is done by controlling how much foreign currency is worth.
2020-08-13 • Updated