A pegged currency is described in full under currency peg, which explains how pegs are set up, defended and sometimes broken. This page focuses on the currency itself rather than the policy.
A currency is "pegged" when its central bank or monetary authority commits to keep its value fixed against an anchor, most often the US dollar or the euro, or within a narrow range around a target. Well-known examples include the Hong Kong dollar, held within a tight band against the US dollar since 1983 through a currency board, and the Saudi riyal, fixed at 3.75 per dollar since the 1980s. Several currencies in West and Central Africa are pegged to the euro.
Holding a peg requires the authority to buy or sell its currency at the target rate, which in turn requires foreign reserves and a willingness to let interest rates follow the anchor's. Countries choose this arrangement for price stability and trade certainty, at the cost of independent monetary policy. The opposite arrangement is a floating exchange rate, and a peg that is adjusted gradually is called a crawling peg. In crypto, stablecoins borrow the same vocabulary, and the failure of a peg is known as a depeg.