If domestic inflation runs well above the anchor economy's, a fixed rate becomes progressively overvalued in real terms and the trade balance suffers, a point measured by the real-exchange-rate. A crawl lets the nominal rate slide at a stated pace, preserving competitiveness without the drama of a one-off devaluation.
The crawl can be announced as a monthly percentage, tied to an inflation differential, or left deliberately vague within a band. Announced crawls are easy to trade because the path is known, so the carry has to compensate for the expected slide.
They break down when the announced pace falls behind reality and the market starts pricing a jump instead of a crawl, at which point capital-controls or a non-deliverable-forward market usually appears.
Example: a currency crawling 1% a month against the dollar loses about 11.4% a year. A local deposit paying 15% still beats holding dollars, but only by about 3%, and only if the crawl holds.
Related: currency-peg, devaluation, real-exchange-rate, emerging-market-currency