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What are the merits of fixed exchange rate system?

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1. Stability: It ensures stability, in the international money market/ exchange market. Day to day fluctuations are avoided. It helps formulation of long term economic policies, particularly relating to exports and imports. 

2. Encourages international trade: Fixed exchange rate system implies low risk and low uncertainty of future payments. It encourages international trade. 

3. Co-ordination of macro policies:Fixed exchange rate helps co¬ordination of macro policies across different countries of the world. Long term economic policies can be drawn in the area of international trade and bilateral trade agreements.

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