Currency pegs are used by some countries to stabilize exchange rates from "summary" of International Financial Management, Abridged Edition by Jeff Madura
Countries may choose to use currency pegs as a means to stabilize exchange rates. A currency peg involves fixing the value of one currency in terms of another, or a basket of other currencies. This can help to maintain stability and predictability in the foreign exchange market. One common type of currency peg is a fixed exchange rate system, where a country's currency is pegged to another major currency, such as the US dollar. By pegging their currency to a more stable currency, countries can help to reduce volatility and uncertainty in their exchange rates. Another type of currency peg is a crawling peg, where the value of the currency is adjusted periodically in small increments....
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