A currency peg is a fixed exchange rate between two currencies, where one currency is pegged or fixed to another at a predetermined ratio. Typically, the pegged currency is either a smaller or less stable currency, while the other currency is a major global currency such as the US dollar, the euro, or the Japanese yen. 
Governments or central banks may use currency pegs to stabilize the value of their currency and provide certainty for businesses and individuals. For example, if a country pegs its currency to the US dollar, it can help to stabilize inflation and ensure that exports remain competitive. This is because a fixed exchange rate helps to reduce uncertainty around the value of the currency and makes it easier for businesses to plan and make investment decisions. 
However, currency pegs can also create challenges for governments and central banks. If the pegged currency is overvalued relative to market conditions, it can lead to a shortage of the currency as demand for exports increases, leading to inflationary pressures. On the other hand, if the pegged currency is undervalued, it can lead to a loss of foreign reserves as demand for the currency increases. 
Overall, currency pegs are a tool used by governments and central banks to manage the value of currencies and provide stability for economies.
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