And by a reset on currency I mean a reset on the value of their currency. Take Iranian rial for example, their exchange rate is 371,992 to a single U.S. dollar. Could a rial ever have a 1:1 ratio without ever collapsing? I obv not a finance bro
In: Economics
There’s some confusion in the answers. exchange rate is independent of revaluation, because the exchange rate is also determined by international trade and capital flows. The only realistic way for the rial to be 1:1 with the US dollar over an extended period of time is for it to be pegged to the US dollar.
This has been done by many countries to other currencies before. China fixed its exchange rate to US dollars late 90s-early 2000s. the Saudi riyal has been pegged to USD for decades as well. I believe when the US used to be a British colony, it pegged its currency to the Spanish reale, although that was under a gold/silver standard instead of a fiat regime.
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