Inconvertibility


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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 ?
Given the inconvertibility of 1885, the public was unwilling to deposit gold back into the banks.
The first objective of this negotiation, once you identify and engage the stakeholders, is to reestablish the communication that has been blocked by what we've just discussed--the win-lose assumption, the inconvertibility of differing cultures, and some people's singular definition of the problem.
It also offers political risk insurance that protects against expropriation, political violence and inconvertibility.
We believe China will not be able to achieve any kind of landing (neither soft nor hard) in the next year or two for three reasons: the absence of swift policy responses to rising economic problems; the heightening investment incentive ahead of major political events; and the inconvertibility of the capital account lengthens the duration of the bubble.
Companies buy PRI to protect themselves against a number of potential risks including asset expropriation, currency inconvertibility, political violence, contract repudiation, licence cancellation, wrongful calling of guarantees and non-delivery by foreign suppliers (pp.
could potentially play an important role in providing investment guarantees for investors and lenders involved in making direct investments in Iraq, covering the risk of expropriation, currency transfer restriction and inconvertibility, war and civil disturbance, and breach of contract.
Madura (2000) states that some common forms of political risk include the uncertainty related to attitude of consumers and investors, attitude of the government, blockage of fund and technology transfers, currency inconvertibility, war, bureaucracy and corruption.
The organisation's political risk insurance policies already cover lenders financing projects, overseas investors or export contractors against losses arising from any one or a combination of the following risk events: expropriation, such as nationalisation of an investment or plant and equipment by the overseas host government; war damage or political violence; currency inconvertibility and exchange transfer blockage; and sovereign breach of contract.
His awareness of the real costs of deflation underlies his policy rules for restoring equality between the market and mint prices of gold after arbitrage-inhibiting inconvertibility has allowed the two to move apart.
Because of inconvertibility and an unsatisfactory business climate recently, Uzbekistan's trade with its neighboring countries, including XUAR, has been low and rather variable.
The political risks covered by the agency's insurance include currency transfer restrictions and inconvertibility, expropriation, war, civil disturbance and breach of contract.