Asian countries pegged their currencies to the US dollar in order to provide a foundation for economic stability, while they got on with the job of growing their economies. In a sense these dollar pegs did their job too well. With Asian currencies pegged to the US dollar, it appeared that the idea of currency [...]
tags: Exchange rates author: admin comments: Comments Off
The very purpose of having a local currency pegged to a base currency (usually the US dollar) is to provide a foundation for economic and financial stability. A currency peg reduces or even eliminates the issue of currency risk, and therefore attracts capital inflows. Those capital inflows become a self-fulfilling prophecy, since they help generate [...]
tags: Exchange rates author: admin comments: Comments Off