Fixed exchange rate

When the value of one currency is tied to that of another or (in the past) to gold. Fixed exchange rates were common until the 1970s as they offered certainties; importers knew the cost of goods bought from abroad; exporters knew the value of the revenues they would receive for selling goods to foreigners. But they proved difficult to maintain as capital flowed more freely across national boundaries. Before the creation of the euro zone its founding members maintained fixed exchange rates with one another. See also floating exchange rate and gold standard.