Kindly explain the concepts of Pegging and Parity Value in detail and also the difference between the 2???
Dear student,
The two terms and the difference between them can be explained as follows:
Parity Value: A fixed exchange rate system maintains a constant exchange rates between currencies. This is referred as official parity value of the currency. It is fixed by monetary authority of country in term of gold.
Pegged exchange rate: A pegged exchange rate system is a mixture of fixed and floating exchange rate regimes. Every monetary authorities of country has to determined exchange rate in USA dollar and Dollar was assigned in gold value at fixed price.
The two terms and the difference between them can be explained as follows:
Parity Value: A fixed exchange rate system maintains a constant exchange rates between currencies. This is referred as official parity value of the currency. It is fixed by monetary authority of country in term of gold.
Pegged exchange rate: A pegged exchange rate system is a mixture of fixed and floating exchange rate regimes. Every monetary authorities of country has to determined exchange rate in USA dollar and Dollar was assigned in gold value at fixed price.