Pegged exchange-rate regimes were strongly defended by the International Monetary Fund (IMF) yesterday, despite the fact Thailand's currency crisis was sparked by fears over the strength of its previous peg to a US dollar-dominated basket of currencies.
Presenting the IMF's flagship biannual World Economic Outlook, economic counsellor and research director Michael Mussa said that following the Thai experience - which culminated in a number of countries floating their currencies this summer - there was a mistaken belief that all countries should move to floating exchange rates.
'There are a number of highly successful developing countries that have maintained high growth and low inflation with quite rigidly pegged exchange rates - we are sitting in one of these economies right now,' he said referring to Hong Kong's peg to the US dollar.
'It is not, by any means, the only one.
'In Argentina we have another very successful example of a country that has used a rigid exchange-rate peg.' He said it was an error to say 'there is only one right way of doing things'.
He cautioned it was equally mistaken that once an exchange-rate regime was set, governments did not adjust their other economic policies accordingly.