Nonconvertible Currency

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Nonconvertible Currency

A currency that may not be converted into another currency on the foreign exchange market, or that may be converted only in limited amounts. Some countries limit convertibility to prevent citizens from making bad investment decisions in, say, a country experiencing hyperinflation, while a few communist countries issue nonconvertible currencies to protect their citizens from capitalist influences. A nonconvertible currency is generally traded only on the black market. It is also called a blocked currency or an inconvertible currency.
References in periodicals archive ?
The tolerance for inconvertible currency released free banks from a heavy burden: paying on demand.
There is thus a need to create a local inconvertible currency version to protect the public good that the population requires.
MOFT maintained its monopoly position over foreign trade activities through legal restrictions that prohibited firms and other organizations from contacting foreign companies, as well as by maintaining an inconvertible currency. MOFT established arbitrary exchange rates to settle accounts rather than to facilitate foreign trade transactions: the ruble-dollar exchange rate of .64 rubles to $1, for example, remained constant for two decades.
The above analysis examined the behavior of a revenue-maximizing government during a short run issue of inconvertible currency. We turn now to the behavior of a private banking system in similar circumstances.
With the Soviet inconvertible currency, hard currency must be allocated by industry or ministry for purchases of Western goods, leaving a U.S.
Within seven months that inconvertible currency had devalued against the dollar and other major currencies by 80 percent (see Table 1).