Soft Currency

DEFINITION of 'Soft Currency'

A currency with a value that fluctuates 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.


Also known as a "weak currency".

BREAKING DOWN 'Soft Currency'

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.

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