The exchange rate where the value of the pegged currency is tied into the value of another currency or basket of currencies is a:
A) crawling peg regime.
B) floating rate regime.
C) managed floating regime.
D) linked exchange rate regime.

Question

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A linked exchange rate regime is when a currency is pegged to another currency or a basket of currencies. This means that the value of the pegged currency is tied to the value of the other currency or currencies, and fluctuations are limited. This is different from a floating rate regime where the exchange rate is determined by market forces, or a managed floating regime where the central bank intervenes in the market to manage the exchange rate within a range. A crawling peg regime is a type of fixed exchange rate regime where the central bank adjusts the rate at a fixed rate or in response to certain economic indicators.

The Exchange Rate Where the Value of the Pegged Currency