convertible currency

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Convertible Currency

A currency that 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, for example, 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.

convertible currency

a currency which can be converted into another currency without special permission from the FOREIGN EXCHANGE CONTROL authorities.
References in periodicals archive ?
The new regulation issued by the policy department at the CBoS Sunday allows all banks to carry out business transactions in all convertible currencies including the U.
It also issued a Law on the Promotion and Protection of Foreign Investment, for the new system of attracting foreign currency; a Tax Regime Law for Sovereign Development of the Mining Arc; the Law of Regulation and Operation for the Exchange Houses at national level, which will complement the system of convertible currencies in the real market of the economy of the country.
Forex bureaux operators say there has been increasing demand for dollars and other convertible currencies as elections come nearer.
One example could be the Basel III Liquidity Coverage Ratio regulation, which requires the High Quality Liquid Assets held by banks to be in convertible currencies.
Indian exporters mainly trade in freely convertible currencies, including the US dollar and euro.
According to data from the International Monetary Fund and Bank of America/Merrill Lynch, reserves held in easily convertible currencies are more than $5 billion in the red if measured against the central bank's forward obligations.
If the Hong Kong dollar were to be pegged to a basket of currencies and retain its hard currency status with high liquidity, it could only be pegged against fully convertible currencies.
Iran claims to have been signing almost one contract per week since the autumn of 2011 -- even as US-led sanctions have crippled its ability to tap international finance, and, in recent weeks, to even carry out transactions in US dollars and some other convertible currencies.
Kathmandu, June 12 (Xinhua-ANI): Nepali government is preparing to bring out the policy to provide at least 2 percent incentive of the total value added exports in convertible currencies in an effort to encourage export.
That brings them on a level playing field with exports sold in freely convertible currencies, such as the dollar.
Countries with convertible currencies under their capital account let their currencies trade with few restrictions for investment purposes.
The euro cannot depreciate, because it fluctuates freely relative to the other convertible currencies in the international financial markets.