Exchange Rates

foreign exchange rate system that existed under the bretton woods system, in which the value of national currencies is set vis-à-vis the value of other currencies. Also called pegged exchange rates. Each country is required to maintain its currency at or near this fixed rate. Fixed exchange rates, established at the Bretton Woods International Monetary Conference of 1944, were used until the early 1970s, when the United States abandoned the gold standard and a system of floating exchange rate was adopted. A modified form of fixed exchange currency rates continues today in the European Monetary System snake, a monetary system adopted in the 1970s to hold currency fluctuations to a band of exchange rates with upper and lower limits.