stabilizing the price of a security, commodity, or currency by intervening in a market. For example, until 1971 governments pegged the price of gold at certain levels to stabilize their currencies and would therefore buy it when the price dropped and sell when the price rose. Since 1971, a floating exchange rate system has prevailed, in which countries use pegging-the buying or selling of their own currencies-simply to offset fluctuations in the exchange rate. The U.S. government uses pegging in another way to support the prices of agricultural commodities. See also parity price.
In floating new stock issues, the managing underwriter is authorized to try to peg the market price and stabilize the market in the issuer's stock by buying shares in the open market. With this one exception, securities price pegging is illegal and is regulated by the Securities and Exchange Commission.
