Home >  Blossary: Forex Jargon  >  Term: Crawling Peg
Crawling Peg

Basically its an exchange rate system in which allows a currency with fixed exchange rate to fluctuate within certain range or band of values. The par value of the stated currency is also adjusted frequently due to market factors such as inflation. This gradual shift of the currency's par value is done as an alternative to a sudden and significant devaluation of the currency.

For example, during the recession period in Mexico, in which the inflation rate in Mexico was out of control, resulting the currency devaluation against US dollar, and because Mexico used the fixed exchange rate it causes the debt of the country increasing. Thus, Mexico used the crawling peg to reduce the effect.

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  • Part of Speech: proper noun
  • Industry/Domain: Economy
  • Category: Forex

Forex Jargon

Category: Business

Total terms: 20

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