Question

By anchoring the value of the currency, a fixed exchange rate system helps in:

विकल्प

• Raising exchange rate instability

• Checking inflation

• Encouraging speculative attacks

• Limiting foreign trade

Answer 1

Anchoring the currency's value restrains domestic price rises, which is why a fixed exchange rate system helps in checking inflation. This anchoring of currency value is listed as one of the key merits of the fixed system.