when a currency peg collapses the country that set the peg too high will suddenly find imports more expensive that means inflation will rise and the nation may also have difficulty paying its debts the other country will find its exporters losing markets and its investors losing money on foreign assets that are no longer worth as much in domestic currency 
expands trade and boosts real incomeproducers focus on producing rather than hedging exchange riskbetter chance to make long term investmentsthe power to purchase foreign goods dropscan lead to chronic trade deficitshigher priced imports and rising inflation