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Fixed vs Floating Exchange Rate Defense

Push market pressure or launch a speculative attack against a currency under a fixed peg — watch the central bank spend foreign reserves to defend it and risk an abrupt devaluation — or switch to a floating regime and watch the rate absorb the same pressure smoothly with no reserves and no crisis.

Economics & Social Systems3DModerate60 FPS

This simulator contrasts how the two major exchange-rate regimes absorb the same market pressure. Under a fixed peg, the central bank spends a finite foreign-reserve stockpile to hold the rate in place — a sustainable defense against mild pressure, but one that can be exhausted by a sustained imbalance or a deliberate speculative attack, forcing an abrupt, disorderly devaluation once reserves hit zero. Under a floating regime, the same pressure is absorbed continuously through smooth price adjustment: there is no stockpile to deplete and no crisis point. Toggle the regime, drag the market-pressure slider, or launch a speculative attack, and watch the exchange rate, reserve level and crisis indicator respond in real time.

⚙ Under the hood

Apply market pressure or launch a speculative attack against a currency and compare the two exchange-rate regimes: under a fixed peg the central bank spends a finite foreign-reserve stockpile to defend the rate, risking an abrupt, disorderly devaluation if reserves run out, while under a floating regime the same pressure is absorbed through smooth, continuous price adjustment with no reserves and no crisis.

economicsexchange ratecurrency pegforeign reservesdevaluationspeculative attackfloating exchange ratecentral bank

3D · Three.js / WebGL renderer · 60 FPS target · runs fully client-side, no install