‘Crawling Peg System’ means
Hybrid of Fixed and Floating Exchange System.
Under a crawling peg system, the currency is pegged to a reference currency or basket at a par value, but that par value is adjusted periodically in small, pre-announced or formula-based steps, often in line with inflation differentials.
It keeps the stability of a fixed rate in the short run while allowing gradual movement over time like a floating rate, so it is regarded as a hybrid of the fixed and floating systems.
A pure fixed rate is not revised in this gradual way, and a pure floating rate is set by market demand and supply without any official peg.
Hence, Hybrid of Fixed and Floating Exchange System.
Similar Questions
The floating rate system is characterised by :
Domestic Currency tends to depreciate owing to :
Important Questions from Foreign Exchange Market
The floating rate system is characterised by :
Domestic Currency tends to depreciate owing to :
