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Forex Speculation with Pegged Rates

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Investors and traders can speculate on pegged rates just as much as they can on fixed rates. However, be cautious of whether the pegged currency is undervalued or overvalued. The asian financial crisis in 1997 showed the world the consequences of keeping a currency pegged artificially high. In Thailand's case, their currency was highly overvalued. Also, be sure to keep an eye on political activities and how they develop as pegged rates often turn into floating rates in a short period of time creating massive losses or massive profits.