Weak Currency

AAA

DEFINITION of 'Weak Currency'

A currency with value that has depreciated significantly over time against other currencies. The long-term outlook for a weak currency is that it will continue to lose value due to fundamental weaknesses in the nation that issues this currency.

INVESTOPEDIA EXPLAINS 'Weak Currency'

Weak currency nations generally have poor economic fundamentals, which may include a high rate of inflation, chronic current account and budget deficits and sluggish economic growth. Nations with weak currencies usually have much higher levels of imports, compared with their exports, resulting in more supply than demand for such currencies on international foreign exchange markets if they are freely-traded currencies. While a temporarily weak phase in a major currency provides a pricing advantage to its exporters, such a benefit seldom accrues to exporters in weak currency nations, since other factors such as high input costs and bureaucratic red tape may offset this advantage.

RELATED TERMS
  1. Country Risk

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

    A currency, usually from a highly industrialized country, that ...
  3. Soft Currency

    A currency with a value that fluctuates as a result of the country's ...
  4. Currency Risk

    A form of risk that arises from the change in price of one currency ...
  5. Tequila Effect

    Informal name given to the impact of the 1994 Mexican economic ...
  6. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. Protect Your Foreign Investments From ...
    Mutual Funds & ETFs

    Protect Your Foreign Investments From ...

  3. How To Trade Forex On News Releases
    Forex Education

    How To Trade Forex On News Releases

  4. 6 Factors That Influence Exchange Rates
    Bonds & Fixed Income

    6 Factors That Influence Exchange Rates

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center