Currency band - Misplaced Pages

(Redirected from Currency trading band) This article is about exchange rates. For currency packaging device, see currency strap.

This economics-related article is a stub. You can help Misplaced Pages by expanding it.

Foreign exchange
Exchange rates
Currency band Exchange rate Exchange rate regime Exchange-rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange rate Managed float regime Dual exchange rate List of countries by foreign-exchange reserves
Markets
Foreign exchange market Futures exchange Retail foreign exchange trading
Assets
Currency Currency future Currency forward Non-deliverable forward Foreign exchange swap Currency swap Foreign exchange option
Historical agreements
Bretton Woods Conference Smithsonian Agreement Plaza Accord Louvre Accord
See also
Bureau de change Hard currency Currency pair Foreign exchange fraud Currency intervention
v t e

A currency band is a range of values for the exchange rate for a country’s currency which the country’s central bank acts to keep the exchange rate within.

The central bank selects a range, or "band", of values at which to set their currency, and will intervene in the market or return to a fixed exchange rate if the value of their currency shifts outside this band. This allows for some revaluation, but tends to stabilize the currency's value within the band. In this sense, it is a compromise between a fixed (or "pegged") exchange rate and a floating exchange rate.

For example, the exchange rate of the renminbi of the mainland of the People's Republic of China has been based upon a currency band; the European Economic Community's "snake in the tunnel" was a similar concept that failed, but ultimately led to the establishment of the European Exchange Rate Mechanism (ERM) and ultimately the Euro.

References

"Investopedia Currency Band Definition"
China Vows Wider Yuan Movement April 18, 2013 Wall Street Journal

Categories:

See also

References