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    Bretton Woods exchange rates

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    Suppose that under the Bretton Woods system, the dollar is pegged to gold at a rate of $35 per ounce and the pound sterling is pegged to the dollar at a rate of $2 = £1. If the dollar is devalued against gold and the pegged rate is changed to $40 per ounce, what does this imply for the exchange value of the pound? Explain your answer.

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    Bretton Woods established a system in which all currencies were pegged to the dollar which could then be converted into gold. In this ...

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    The expert examines Bretton Woods exchange rate systems.

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