How it works
The authority may use reserves, interest rates, capital controls or other tools to maintain the relationship. Some systems use a narrow band rather than one exact rate.
What to check
Read the central bank's framework to understand the target, band and intervention mechanism. A peg can be credible for years but still depend on policy capacity.
- Identify the anchor currency
- Read the official policy framework
- Consider reserve and policy capacity
Limits and risks
A peg reduces some day-to-day exchange-rate movement but does not remove risk. Pegs can be adjusted, widened or abandoned under economic pressure.
Primary sources
BIS 2025 Triennial Central Bank Survey↗FCA: Contracts for difference (CFDs)↗General information only. Investment products can lose value, and terms, fees and regulation can change.