Fixed exchange rates promotes international trade and investment
The proponents of fixed exchange rates argue that fixed parities provide the best environment for the conduct of international trade and investments.It is argued that just as a single currency is the best means of promoting economic activity at the national level, fixed exchange rates are the best means of promoting international trade and investment at the international level.Exchange-rate fluctuations cause additional uncertainty and risk in international economic transactions and inhibit the growth and development of such transactions.