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A conventional peg refers to when a country formally pegs its currency at a fixed rate to another currency or basket of currencies where the basket reflects the geographic distribution of trade, services, or capital flows.
for better understanding lets explain what conventional peg means
- conventional peg as related to when country formally (de jure) pinpoint their own currency at a fixed rate to the currency of another said country example is, from the currencies of major trading or financial partners and weights showing on the distribution of trade in different geographical zones
- The known backbone or anchor currency or basket weights are public or notified to the IMF and a country authorities are able to maintain the fixed parity through direct intervention
From the above, we can therefore say that the answer A conventional peg refers to when a country formally pegs its currency at a fixed rate to another currency or basket of currencies where the basket reflects the geographic distribution of trade, services, or capital flows is correct.
learn more about exchange rates from:
brainly.com/question/21384395
