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fixed exchange rate investment & finance definition

An exchange rate that is set by the central bank or governmental monetary authorities. This is in contrast to floating exchange rates that are determined by the market. One country that uses a fixed exchange rate is China, which pegs its yuan to the U.S. dollar.

See fixed exchange rate in Wall Street Words

An exchange rate between currencies that is set by the governments involved rather than being allowed to fluctuate freely with market forces. In order to keep currencies trading at the prescribed levels, government monetary authorities actively enter the currency markets to buy and sell according to variations in supply and demand. Compare floating exchange rate. See also devaluation.

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