Hard currency

Hard currency, and hard or strong currency, is a currency whose exchange rate is compared to other medium and long term stable or increasing. Hard currencies are typically characterized by low inflation, as well as full convertibility and fungibility ( easy comparison and interchangeability ) from. Contrary is a soft currency or weak currency. This is characterized by devaluation in the foreign exchange market ( and usually higher inflation up to the runaway or hyperinflation ).

The "hardness" of a currency may fluctuate over time.

Hardness of a currency and currency coverage

A relationship with a currency coverage ( eg gold standard ) is not mandatory. Also covered currencies may be subject to inflation (eg price revolution ) and need not necessarily be hard currencies. However, the introduction of a cover, in particular, a currency Boardes often a suitable instrument for the stability of the external value of a currency is to improve, since the possibilities of inflation are low.

Hard-currency country

Accordingly we speak of hard currency country to identify countries with hard currency. Hard-currency countries are preferred investment countries. Their economic policy is characterized by seeking monetary stability. Analog is understood by the term soft-currency country a country whose currency devaluation is at risk or its convertibility ( for example, currency restrictions ) limited.

Examples of hard currency

The euro is a strong currency qualified for his predecessor currencies, this was not uniform. While the German mark and the Austrian Schilling always been considered as a hard currency, were Italian lira or Spanish peseta during long phases of soft currencies, subject to the depreciating against the D-Mark. One of the hardest currencies are historically, the Swiss franc and the Japanese yen. Currencies like the U.S. dollar and the French franc are about in the middle.