Peg to the Dollar

[Tobi]

All the other currencies in the world were pegged to the dollar. This meant that if the value of the dollar changes by 5% then the value of the other currencies would also change by 5% only. There was a 1% fluctuation that was allowed between the value of the dollar and other currencies. If the difference in the value of the dollar and the value of other currencies was greater than 1% then the Central Banks were instructed to engage in open market buying and selling operations and bring the currency within the relevant range.

 

[gwolf666]

Previously, all currencies in the world were pegged to the dollar, meaning that if the dollar's value changed by 5%, other currencies would also change by the same amount. There was an allowable fluctuation of 1% between the dollar's value and other currencies. If the difference exceeded 1%, central banks had to intervene through open market buying and selling operations to return the currency to the established range. This system helped maintain global exchange rate stability.