Topics
Fixed Exchange Rate
An exchange rate that is fixed against other major currencies through action by governments or central banks, usually within small margins of fluctuation around the central rate. Likely to involve periodic intervention in the foreign exchange market by one or more central banks to buy or sell the currency in question if it moves below or above its margins.
A fixed currency regime, also known as a pegged exchange rate system, is a type of exchange rate system in which a country's currency is pegged or fixed to the value of another currency or a basket of currencies. Under a fixed currency regime, the central bank of the country will buy or sell its own currency in the foreign exchange market in order to maintain the fixed exchange rate.
Some examples of countries with fixed currency regimes include:
- Hong Kong: The Hong Kong dollar is pegged to the U.S. dollar at a rate of approximately 7.75 Hong Kong dollars to 1 U.S. dollar. The Hong Kong Monetary Authority (HKMA) is responsible for maintaining the peg through intervention in the foreign exchange market.
- China: The Chinese renminbi is pegged to a basket of currencies, with the U.S. dollar being the most important component of the basket. The People's Bank of China (PBOC) is responsible for maintaining the peg through intervention in the foreign exchange market.
- Saudi Arabia: The Saudi riyal is pegged to the U.S. dollar at a rate of 3.75 riyals to 1 U.S. dollar. The Saudi Arabian Monetary Authority (SAMA) is responsible for maintaining the peg through intervention in the foreign exchange market.
- Kuwait: The Kuwaiti dinar is pegged to a basket of currencies, with the U.S. dollar being the most important component of the basket. The Central Bank of Kuwait is responsible for maintaining the peg through intervention in the foreign exchange market.
- Bahrain: The Bahraini dinar is pegged to the U.S. dollar at a rate of approximately 0.38 dinars to 1 U.S. dollar. The Central Bank of Bahrain is responsible for maintaining the peg through intervention in the foreign exchange market.
-
IB Economics - Fixed and Managed Exchange Rates
Study Notes
-
IB Economics - Effects of Exchange Rate Changes
Study Notes
-
AQA A-Level Economics Year 13 Macroeconomics Knowledge Organiser
Poster / Student Handout
-
4.2.6.4 Exchange Rate Systems (AQA A Level Economics Teaching Powerpoint)
Teaching PowerPoints
-
Exchange Rates - Fixed Currency Systems
Study Notes
-
Fixed Exchange Rates - Chain of Reasoning
Practice Exam Questions
-
Floating versus Fixed Exchange Rates
14th November 2022
-
Economics of Floating versus Fixed Exchange Rates
Topic Videos
-
Currency options for an independent Scotland
4th August 2022
-
Key Diagrams - Semi-Fixed and Fixed Exchange Rates
Topic Videos
-
Managed Floating Exchange Rates
Study Notes
-
Free economics lesson resources
19th July 2016
-
Why Egypt just let its currency crash by 48%!
7th November 2016
-
Balance of Payments & Currencies Revision Quiz
Quizzes & Activities
-
Currencies Revision Quiz
Quizzes & Activities
-
Exchange Rates
Topic Videos
-
Revision Presentation - Economics of Currency Markets
Teaching PowerPoints
-
Factors Causing Currency Changes
Topic Videos
-
Exchange Rates Revision Webinar
Topic Videos
-
Exchange Rates (Online Lesson)
Online Lessons
-
Currency Systems
Topic Videos
-
Currency Systems - Clear The Deck Key Term Knowledge Activity
Quizzes & Activities
-
Exchange Rates - Currency Systems
Study Notes
-
Exchange Rates - Floating Currencies
Study Notes
-
Test 7: A Level Economics: MCQ Revision on Exchange Rates
Practice Exam Questions
-
Fixed versus Floating Exchange Rates (MCQ Revision Question)
Practice Exam Questions
-
Fixed and Floating Exchange Rates
Topic Videos
-
Halting the Yuan slide - Reserves dim sum
7th February 2016
-
Currencies: How sustainable is the riyal/dollar peg?
14th January 2016
-
60 Second Adventures in Economics- The Impossible Trinity
20th September 2012
-
Can Denmark Succeed Where Switzerland Failed?
3rd February 2015
-
Currency pegs around the world
5th February 2015
-
Challenging times for exchange rates
18th April 2015
-
Beyond the Bike Lesson Resources - Exchange Rates
5th November 2015