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Old 01-15-2012, 06:51 AM   #1 (permalink)
 
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What is a soft peg?


Can anyone explain what a soft peg is please, heard the term but unsure of its meaning
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Old 01-15-2012, 06:56 AM   #2 (permalink)
 
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What are soft pegs

A soft peg is a term used for countries with a fixed exchange rate regime. There are soft and hard pegs. Soft pegs generally let their exchange rate fluctuate through a desired bracket. Hard pegs follow the anchor currency more stictly.

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Old 01-15-2012, 10:22 AM   #3 (permalink)
 
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Thanks mate, still a little unsure, fixed exchange rate??? Is that like an E.R.M????, And anchor??? Is that in relation to a currency pair.
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Old 01-15-2012, 12:36 PM   #4 (permalink)
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Hi Richie

What they mean is fixing the exchange rate between two currencies. A hard peg means that the country tries to keep it's currency at the exact same exchange rate as another currency (usually it is a country trying to keep its currency pegged to the USD).

A soft peg means the country tries to keep the currency exchange rate basically about the same, but allows it to fluctuate up and down a little.

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Old 01-15-2012, 02:32 PM   #5 (permalink)
 
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Thanks again tek, I've most recently heard the term being used in regards to the yen, am right in thinking this currency is manipulated quite a bit?
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Old 01-15-2012, 04:21 PM   #6 (permalink)
 
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This is some valuable information.
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