A fixed exchange rate, also known as a hard peg, is a currency regime where a country's exchange rate is tied to another currency or gold. It offers stability, promotes capital movement, and reduces speculation, but can discourage foreign investment and limit monetary flexibility. Overall, it has both merits and demerits that impact economic integration and growth.

1. FIXED EXCHANGE
RATE

2. FIXED EXCHANGE RATE
• Introduction
• What is fixed exchange rate?
• Merits of Fixed Exchange Rate
• Demerits of Fixed Exchange
Rate

3. INTRODUCTION
The exchange rates include two numbers: the
bid and the offer.
The exchange rates which are post Bretton-
Woods, also called as present exchange rates
regimes are:
1) Fixed exchange rate
2) Flexible exchange rate

4. WHAT IS FIXED EXCHANGE RATE?
The Fixed exchange rate also called as hard
peg or rigid peg rate.
 The Fixed exchange rate is a country's
exchange rate regime under which the
government or central bank ties the official
exchange rate to another country's currency or
to the price of gold..

5. MERITS OF FIXED EXCHANGE RATE
 Exchange Rate Stability
 Promotes Capital Movements
 Prevents Capital Outflow
 Prevents Speculation in Foreign Exchange Market
 Promotes economic integration of the world
 Promotes growth of internal money and capital markets

6. DEMERITS OF FIXED EXCHANGE RATE
 Discourage Foreign Investment
 Monetary Dependence
 Cost-Price Relationship not Reflected
 Conflict with other objectives
 Less Flexibility
 Join at the Wrong Rate
 Current Account Imbalances

7. HEY FRIEND,
This was just a summary on Fixed Exchange Rate. For more
detailed information on this topic, please type the link given
below or copy it from the description of this PPT and open it in
a new browser window.
www.transtutors.com/homework-help/international-
economics/economic-policy-in-open-economy/fixed-exchange-
rate/