Convertible Currency


DEFINITION of 'Convertible Currency'

A currency that can be readily bought or sold without government restrictions, in order to purchase another currency. A convertible currency is a liquid instrument when compared to currencies tightly controlled by a central bank or other regulating authority.

BREAKING DOWN 'Convertible Currency'

Developing countries or those with more authoritative governments are more likely to place restrictions on the exchange of currencies. Currencies from these countries are typically less stable, and may come from economies with high inflation rates, and are more illiquid.

  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  3. Forex - FX

    The market in which currencies are traded. The forex market is ...
  4. Illiquid

    The state of a security or other asset that cannot easily be ...
  5. Central Bank

    The entity responsible for overseeing the monetary system for ...
  6. Currency

    A generally accepted form of money, including coins and paper ...
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