A system that holds a currency at a set rate
The rate against a chosen currency is declared in advance and the authorities buy and sell to defend it. Trade planning becomes easier, but reserves and the freedom of monetary policy are surrendered to hold the line. When the defence fails, the level often drops sharply all at once.
While Japan was fixed at 360 yen to the dollar, the rate did not move for years at a time.
For learning, not investment advice. Decisions are your own.
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