A currency peg (or fixed exchange rate) is when a country maintains its currency at a fixed ratio to another currency.
Pegged Asian Currencies
| Currency | Peg Type | Rate |
| HKD (Hong Kong Dollar) | Fixed to USD | 7.75-7.85 |
| CNY (Chinese Yuan) | Managed float | ~7.0-7.3 (daily band) |
| VND (Vietnamese Dong) | Managed float | Adjusted periodically |
Hong Kong's Linked Exchange Rate
Since 1983, HKD has been pegged at 7.80 to USD (with a band of 7.75-7.85). The Hong Kong Monetary Authority (HKMA) defends this peg by:
- Buying/selling USD reserves
- Adjusting interest rates to match US rates
Why Pegs Break
- Thailand (1997): THB peg to USD collapsed, triggering the Asian Financial Crisis
- China (2005): Abandoned USD peg, moved to managed float
When a peg breaks, currency devaluation can be sudden and severe — this is what happened across Asia in 1997-98.