A Currency Peg is a policy in which a national government or central bank sets a fixed exchange rate for its currency with a foreign currency or a basket of currencies and stabilizes the exchange rate between countries. Currency pegs are established as part of an attempt to maintain economic stability and ensure the value of a country’s currency remains stable. A currency peg does not necessarily require that the currency be backed by gold or some other asset, but in most cases, it is pegged to another currency that is backed by gold.A currency peg is also known as a fixed exchange rate, which is an exchange rate that does not fluctuate with market conditions. Instead, it is set by government policy and maintained by intervention in the foreign exchange market to ensure its value does not change.
