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Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A currency that fluctuates in value frequently. Soft currencies are generally issued by governments that are less stable and/or have weaker economies than stronger currencies. As such, most soft currencies come from countries in the developing world. Central banks rarely hold reserves of foreign soft currencies as they do little or nothing to stabilize the local currency. A soft currency is also called a weak currency. See also: Strong currency.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
soft currencya FOREIGN CURRENCY that is in weak demand, but in abundant supply on the FOREIGN EXCHANGE MARKET. This situation usually arises when a country is in persistent balance-of-payments deficit. Compare HARD CURRENCY.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
soft currencya FOREIGN CURRENCY that is in weak demand but in abundant supply on the FOREIGN EXCHANGE MARKET. Soft currency status is usually associated with an economically weak country that is running a large deficit in its BALANCE OF PAYMENTS; the supply of the currency is high to finance the purchase of imports, but demand for the currency is relatively weak because the amount of it being required for the purchase of exports is much lower. Under a FLOATING EXCHANGE RATE SYSTEM, however, the demand for, and supply of, the currency should be, in theory, brought into balance by a DEPRECIATION 1 in its EXCHANGE-RATE value. Compare HARD CURRENCY.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005