Soft Currency

AAA

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".

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Barter

    The act of trading goods and services between two or more parties ...
  3. Country Risk

    A collection of risks associated with investing in a foreign ...
  4. Currency

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

    A currency, usually from a highly industrialized country, that ...
  6. Hard Money

    1. Funding by a government or organization that is repetitive, ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. Dollarization Explained
    Forex Education

    Dollarization Explained

  3. Dual And Multiple Exchange Rates 101
    Forex Education

    Dual And Multiple Exchange Rates 101

  4. What Is Money?
    Economics

    What Is Money?

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center