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Crawling Peg Currency System

A crawling-peg exchange rate system is a type of flexible exchange rate system where the value of a currency is adjusted gradually over time in response to changes in economic conditions.

The rate of adjustment is typically based on a pre-determined formula or set of rules, such as a basket of currencies or a measure of inflation.

In a crawling-peg exchange rate system, the central bank of a country may periodically adjust the exchange rate of its currency to maintain its competitiveness in international trade and to stabilize its economy. The rate of adjustment is typically slow, so as to minimize the impact of currency fluctuations on the economy.

Examples of countries that have used a crawling-peg exchange rate system include:

  1. Israel: Israel has used a crawling-peg exchange rate system since the 1980s to stabilize its economy and maintain its competitiveness in international trade.
  2. China: China has used a crawling-peg exchange rate system since the 1990s to gradually adjust the value of its currency in response to changes in its economy and the global economy.
  3. Argentina: Argentina has used a crawling-peg exchange rate system in the past to stabilize its economy and address high inflation, although the country has since adopted a floating exchange rate system.

In conclusion, a crawling-peg exchange rate system is a flexible exchange rate system that allows for gradual adjustments in the value of a currency in response to changes in economic conditions. This type of exchange rate system has been used by a number of countries to maintain competitiveness in international trade and stabilize their economies.

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