Question : What is the term used to describe a situation where a country's central bank fixes the value of its currency to another currency at a specified exchange rate?
Option 1: Currency intervention
Option 2: Currency hedging
Option 3: Currency manipulation
Option 4: Currency pegging
Correct Answer: Currency pegging
Solution : The correct answer is d) Currency pegging
Currency pegging refers to a situation where a country's central bank or monetary authority fixes the value of its currency to another currency, often a major currency like the US dollar or the euro, at a specified exchange rate. The purpose of currency pegging is to maintain stability in the exchange rate and provide a predictable environment for international trade and investment. The central bank intervenes in the foreign exchange market as needed to ensure that the currency remains within the specified exchange rate range.
Question : What is the term used to describe a situation where a country's central bank actively buys or sells its own currency in the foreign exchange market to influence its value?
Question : A country's central bank can intervene in the foreign exchange market to influence the value of its currency. This is known as ________.
Question : What is the term used to describe the buying and selling of currencies with the expectation of making a profit from exchange rate fluctuations?
Question : What term is used to describe the situation when a country's currency value is fixed to another currency or a basket of currencies?
Question : What is the term used to describe the practice of a country manipulating its currency to gain an unfair trade advantage?
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