repegged

A repeg refers to the act of re-establishing a fixed exchange rate between a currency and another currency or a commodity, such as gold. This typically occurs after a period where the currency's value has deviated significantly from its previously set peg. Countries often implement currency pegs to achieve economic stability, control inflation, and facilitate international trade. However, maintaining a fixed exchange rate can become challenging under various economic pressures, such as speculative attacks, large trade deficits, or significant changes in monetary policy.

When a currency's market value falls below its pegged rate, the central bank responsible for the peg may intervene in foreign exchange markets. This intervention usually involves selling foreign reserves (like US dollars or Euros) to buy its own currency, thereby increasing demand and pushing its value back up towards the target rate. Conversely, if the currency's value rises above the peg, the central bank might intervene by buying foreign currency and selling its own, increasing supply to lower its value.

The decision to repeg can be a difficult one. If a country's economic fundamentals no longer support the existing peg, attempting to defend it can lead to a rapid depletion of foreign exchange reserves, potentially triggering a financial crisis. In such situations, a country might choose to devalue its currency to a new, more sustainable level or, in some cases, abandon the peg altogether and allow the currency to float freely. The process of repegging aims to restore confidence in the currency and the stability of the country's economic policies.