Inconvertibility

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Related to Currency Inconvertibility: Blocked currency

Inconvertibility

The inability of a local currency to be exchanged for another currency. Often includes transfer risk.

Inconvertibility

The state in which a currency may not be exchanged for a foreign currency. A few socialist governments issue inconvertible currencies such as the Cuban peso in order to protect their citizens from perceived capitalist infiltration. Most of the time, however, domestic regulators may deem a foreign currency inconvertible in order to protect local investors from bad investment decisions. For example, regulators may deem a currency going through a period of hyperinflation as inconvertible; that way, investors do not make investments in that currency as they are likely to soon be worthless. See also: Foreign exchange.
References in periodicals archive ?
OPIC insures against currency inconvertibility, expropriation and civil strife, and can also provide corporate financing.
Specific risks identified by respondent firms are related primarily to monetary factors such as high inflation rates, currency devaluation, and currency inconvertibility.
These include confiscation, expropriation or nationalization of assets, contract termination, license termination and embargo, currency inconvertibility or nontransfer of payments and wrongful calling of "on demand" guarantees.
private investment in less developed countries by reducing risks, especially political risks (including currency inconvertibility, expropriation, political violence, and terrorism), for U.
With cross-border M&As becoming more common, companies involved with transactions in emerging markets--and their financiers--face risks such as the expropriation of assets, currency inconvertibility and acts of violence.
International policies generally cover losses due to political instability, currency inconvertibility, embargoes, acts of war and natural disasters.
investors against losses that might arise from currency inconvertibility or expropriation.
Export credit insurance covers both political losses resulting from conditions such as war, expropriation and currency inconvertibility and commercial losses resulting from insolvency or default.
However, a separate political risk policy had to be added to protect against the risks of expropriation, nationalization or currency inconvertibility.
Widespread sovereign debt defaults on bank loans (principally in Latin America) produced a wave of currency inconvertibility claims as well.
Asked about their companies' loss experiences, more than one-third had experienced transfer-risk losses, such as currency inconvertibility or repatriation restrictions; 24% had suffered losses from trade risks, such as embargoes; 19% from political violence; and 18% from expropriation risks.