Account
New to ADSS? Open an
account now to get started.
Already have an account?
Add funds to your ADSS account
Account
New to ADSS? Open an
account now to get started.
Add funds to your ADSS account
An adjustable peg is a type of currency peg where a currency is pegged to another major currency, usually the US Dollar or Euro, but the peg allows for some fluctuation around the set level, and the acceptable limit of this fluctuation is regularly revised. This allows central banks to respond to changing economic conditions without officially abandoning the peg. An adjustable peg is considered a preliminary step towards a full float of a currency. For this reason, it is sometimes referred to as a dirty float.
A crawling peg is a closely related term where a currency trades in a narrow band around its fixed currency. This band may or not be adjusted frequently. Where it is, the crawling peg is also an adjustable one. All of these practices provide ways for policymakers to strike a balance between maintaining a strict currency peg and free-floating currency markets. Adjustable pegs first appeared following the introduction of the Bretton Woods system in the 1940s and have remained a feature of certain currency markets to this day, usually – but not always – in smaller, exotic currencies.
If a currency peg is maintained, fluctuation in price will be limited to a certain range. That means there are fewer opportunities for volatility-seeking FX CFD traders in fixed markets than free-floating ones, but it is still possible to trade pegged currencies. When a peg is suddenly abandoned, it can cause extreme volatility. This can happen without any warning, as in the case of the Swiss franc scrapping its peg to the Euro in 2015.
You can start trading and investing online by opening a live trading or forex demo trading account.
See all glossary trading terms
See related entries from our knowledge base:
ADSS
8th floor, CI Tower
Corniche Road
PO Box 93894
Abu Dhabi
United Arab Emirates
Trading Services
ts@adss.com
+971 2 657 2414
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities L.L.C – S.P.C (“ADSS”), a limited liability company – sole proprietorship company incorporated under United Arab Emirates law. Registered under Commercial License No.1190047. ADS Securities L.L.C S.P.C is regulated and authorised in the UAE by the Capital Market Authority (CMA) under Category 1 License No.305027 (Trading Broker, Trading and Clearing Broker, Trading Broker in the International Markets, Trading Broker of OTC Derivatives and Currencies in the Spot Market, Financial Products Dealer) and Category 5 License No.20200000217 (Introduction). Registered Office: 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
