Question17 An exchange rate regime where the domestic currency relative to a foreign currency is held within a defined band is termed as ______________. a pegged exchange rate a free float a managed float a fixed exchange rate a brokered exchange rate ResetMaximum marks: 1 Flag question undefined

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The question asks about an exchange rate regime in which the domestic currency is kept within a defined band relative to a foreign currency.
Option 1: a pegged exchange rate. This describes a regime where the central bank commits to maintaining the currency within a specific band or against another currency, often with official interventions when the band is threatened. This matches the description given in the question.
Option 2: a free float. In a free float, the currency value is determined by market forces without a target band or intervention to keep it within a range, so it does not fit the idea of a defined band.
Option 3: a managed float. A managed (or dirty) float allows market forces to determine the exchange rate but involves occasional central bank intervention to influence the rate. While there can be some stabilization efforts, it is not characterized by a strict defined band around a target value, so it is not the best fit here.
Option 4: a fixed exchange rate. A fixed rate means the currency is pegged to another currency at a fixed ratio, not within a band around a moving target. The term implies no band or only a single fixed level, which contrasts with the banded description.
Option 5: a brokered exchange rate. This term generally refers to a mechanism where brokers facilitate currency trading or liquidity provision, not a regime describing a banded target for the currency’s value. It does not address a banded regime.
In summary, the description of keeping the domestic currency within a defined band aligns with the concept of a pegged exchange rate, where policy aims to maintain stability within set bounds against a reference currency.

Question17 An exchange rate regime where the domestic currency relative to a foreign currency is held within a defined band is termed as ______________. a pegged exchange rate a free float a managed float a fixed exchange rate a brokered exchange rate ResetMaximum marks: 1 Flag question undefined

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Question17 An exchange rate regime where the domestic currency relative to a foreign currency is held within a defined band is termed as ______________. a pegged exchange rate a free float a managed float a fixed exchange rate a brokered exchange rate ResetMaximum marks: 1 Flag question undefined

View Explanation

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