Soft currency

Soft currency,

Definition of Soft currency:

  1. Currency, or a currency, in the form of banknotes, bills, etc., as opposed to coins; paper currency. Later also: unsecured paper credit as opposed to coins, banknotes, or other objects or documents viewed as having exchangeable value.

  2. A soft currency is one with a value that fluctuates, predominantly lower, as a result of the country's political or economic uncertainty. As a result of the of this currency's instability, foreign exchange dealers tend to avoid it. In financial markets, participants will often refer to it as a "weak currency.".

  3. A currency which is not convertible into other currencies, or whose price in terms of other currencies is expected to fall.

  4. Currencies from most developing countries are considered to be soft currencies. Often, governments from these developing countries will set unrealistically high exchange rates, pegging their currencies to a currency such as the U.S. dollar.

  5. Currency belonging to a small, weak, or wildly fluctuating economy and which, therefore, is not in favor with foreign exchange dealers.

Meaning of Soft currency & Soft currency Definition