This Means That the Fixed Exchange Rate?

Exchange rate - the rate at which one currency can be exchanged for another. In other words, it is - the value of the currency of one country compared to other currencies. If you are traveling to another country, you have to "buy" a local currency. Exchange rate - the price at which you can buy the currency. If you are traveling to Egypt, for example, and the exchange rate of 1.00 USD - EGP 5.50, this means that for every U.S. dollar you can buy five and a half Egyptian pounds. There are two ways the price of the currency can be defined in relation to the other. One of them is described below.

Fixed or pegged, rate - the course that the government (central bank) sets and maintains the official exchange rate. Typically, a currency exchange rate is fixed relative to the major world currencies such as dollar, euro, yen or a basket of currencies.

To maintain the national currency, the central bank buys and sells it on the foreign exchange market. If, for example, decided that the cost per unit of domestic currency is equal to 3.00 USD, the central bank will need to ensure that the market can deliver those dollars by buying them on the domestic currency to keep its rate at a fixed level.

To maintain the currency, the central bank must keep a high level of foreign reserves.

The fixed exchange rate - currency reserves should be large.

This currency is released to the market to buy up the national currency in order to avoid the fall of its course. Or conversely, bought up to prevent the rise of the national currency. This ensures the maintenance of a fixed exchange rate.

The central bank can also change the official exchange rate when necessary.
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