convertibility

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Convertibility

The ability to exchange a currency without government restrictions or controls.

Convertibility

The state of or the ease with which a currency may be exchanged for a foreign currency. Currency convertibility is vitally important in the foreign exchange market; higher convertibility means that a currency is more liquid and, therefore, less difficult to trade. Factors affecting convertibility include the availability of foreign currency reserves in a given country and domestic regulations seeking to protect local investors from bad investment decisions in, say, a currency undergoing a period of hyperinflation. A few socialist governments even issue inconvertible currencies, such as the Cuban peso, in order to protect their citizens from perceived capitalist infiltration. See also: Inconvertibility.

convertibility

the extent to which a financial security such as a FOREIGN CURRENCY or CONVERTIBLE LOAN can be exchanged for some other currency or financial ASSET.

convertibility

the extent to which one foreign currency or INTERNATIONAL RESERVE ASSET can be exchanged for some other foreign currency or international reserve asset.

International trade and investment opportunities are maximized when the currencies used to finance them are fully convertible, i.e. free of FOREIGN EXCHANGE CONTROL restrictions.

References in periodicals archive ?
A shares and B shares markets), which was characteristic of complete market segmentation, and similar to the Chinese foreign exchange markets before partial currency convertibility.
First, does partial currency convertibility help produce more informed RMB official exchange rates, at least in the long run?
Internal currency convertibility was achieved in August when Soviet citizens were granted the legal right to hold hard currency and open bank accounts without having to explain the source of their hard currency earnings -- hard currency accounts previously were restricted to those who had worked abroad or who were in contact with foreign companies.
Gilman, Martin (1990), "Heading for Currency Convertibility," Finance and Development 27 (Washington, DC: IMF and World Bank), pp.
I am deeply convinced that the reform process after the crossing of the Rubicon -- which means after price liberalization, after integration into the world economy by means of foreign trade liberalization, after introduction of internal currency convertibility, and after initiation of a vigorous privatization program -- begins to have its own internal dynamics and can only be stopped by huge mistakes.
macroeconomic stand-by arrangements facilitating price deregulation, foreign trade liberalization and currency convertibility in countries with limited hard currency reserves and huge currency debts.
Currency convertibility is still in question, and foreign firms can repatriate only 15 percent of earnings made in Poland.
The debt service ability of China Mobile (Hong Kong) continues to be affected by the currency convertibility risk arising from the Chinese yuan-dominated cash flow of its operating subsidiaries in China, the agency said.
The risks of currency convertibility and transferability are being assumed under the cross currency swap by the swap provider facilitating a rating of triple-'A' on the US$ class A Euro notes, Standard & Poor's said.
This word does not exist in my dictionary," Dar said, rejecting reports a devaluation was on the horizon as a result of an agreement with IMF that Pakistan will switch to full currency convertibility by July.
Shipments to China, Russia and southeast Asia have been reduced because of import controls, currency convertibility and decreased demand.
This agreement also provides for undertakings regarding tax concessions, import duties, withholding taxes, currency convertibility and availability, and political force majeure events.