How Wise are Currency Pegs?

How Wise are Currency Pegs?Gold Silver Reports — How Wise are Currency Pegs? — Some currencies linked to the dollar came under attack in early 2016 from traders speculating that it’s becoming too expensive to continue defending them.

Currency markets have been roiled since China cut the value of the yuan for the first time in two decades; the country burned through more than $500 billion of its reserves in 2015. Both Egypt and Nigeria also effectively devalued last year, as did Argentina. Switzerland shocked traders by scrapping the franc’s 3-year-old cap against the euro in early 2015, which forced the central bank in Denmark to defend the krone’s tie-up to the euro.

Though the currencies of most large countries and the 19-nation euro float freely, the recent trend has been heading the other way: about 35% of countries monitored by the International Monetary Fund (IMF) gave the market free rein in 2015, down from 40% in 2008. — Neal Bhai Reports

How Wise are Currency Pegs?


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