Which country uses fixed currency?

Which country uses fixed currency?

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Major Fixed Currencies

Q. What is pros and cons of fixed exchange rate regime?

By pegging its currency, a country can gain comparative trading advantages while protecting its own economic interests. A pegged rate, or fixed exchange rate, can keep a country’s exchange rate low, helping with exports. Conversely, pegged rates can sometimes lead to higher long-term inflation.

Q. What are the benefits of being on a fixed exchange rate regime?

The advantages of a fixed exchange rate include:

  • Providing greater certainty for importers and exporters, therefore encouraging more international trade and investment.
  • Helping the government maintain low inflation, which can have positive long-term effects such as keeping down interest rates.
CountryRegionPeg Rate
PanamaCentral America1.000
QatarMiddle East3.64
Saudi ArabiaMiddle East3.75
United Arab EmiratesMiddle East3.673

Q. What do u mean by fixed exchange rate?

A fixed exchange rate is a regime imposed by a government or central bank which ties the official exchange rate of the country’s currency with the currency of another country or the gold price. A fixed exchange rate system has the aim of keeping the value of a currency within a narrow band.

Q. What are the advantages and disadvantages of fixed and flexible exchange rates?

Flexible Exchange Rate System: Advantage and Disadvantage

  • (i) Automatic Adjustment in BOP:
  • (ii) No Collusion Between Internal-External Objectives:
  • (iii) Absorption of Sudden Shocks:
  • (iv) Minimum Buffer of Foreign Exchange Reserves:
  • (i) Uncertainty and Confusion:
  • (ii) Hampering Investment:
  • (iii) Risk, Instability, and Speculation:
  • (iv) Inflationary in Character:

Q. What are the limitations of a fixed exchange rate regime?

Disadvantages of fixed exchange rates

  • Conflict with other macroeconomic objectives.
  • Less flexibility.
  • Join at the wrong rate.
  • Require higher interest rates.
  • Current account imbalances.
  • Difficulty in keeping the value of the currency – If a currency is falling below its band the government will have to intervene.

Q. What is flexible exchange rate and its advantages?

Flexible Exchange Rate Advantages. Flexible exchange rates eliminate the need for central banks to hold international reserves. Flexible exchange rates are helpful to do away with barrier to trade and capital movements.

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