Nonconvertible Currency

Nonconvertible Currency

Any currency that is used primarily for domestic transactions and is not openly traded on a forex market, usually due to government restrictions on the currency which prevent it from being exchanged for foreign currencies. Also known as a "blocked currency".

Notes:

As the name implies, it is virtually impossible to convert a nonconvertible currency. Nonconvertible currencies used in a particular region tend to have the effect of limiting the region's participation in international trade and distorting its balance of trade.

See also: Blocked Currency, Balance of Trade - BOT, Currency, Exchange Rate, Foreign Currency Effects, Foreign-Exchange Risk, Forex - FX, Repatriation