See: Hard Currency.
Just as you purport to be, currencies are hard on the outside, but soft on the inside. Well, some of them.
Soft currencies are currencies that fluctuate easily due to political and/or economic uncertainty or instability...usually fluctuating downward. Soft currencies imply pliability, meaning they’re seen as weak currencies.
While some investors might flock to soft currencies, they’re doing so because it’s risky, and because nobody else is doing it. Um...because it’s risky. Most investors stay away from soft currencies, preferring to deal with more predictable and stable currencies. Not just investors, but big ’uns (like central banks) will often stay away from soft currencies.
Generally, countries with higher GDP per capita have more stable currencies, and countries with lower GDP per capita have softer currencies. Venezuela, a country largely dependent on its oil production, is known for its soft currency...and it shows. They’ve been in a recession for a while due to softness in global oil demand. They bet the ranch on oil and, well, they're losing the ranch.
And that's petro oil, not bodybuilder oil. Just so we’re clear.
Related or Semi-related Video
Finance: What is a Dual Currency Bond?33 Views
Finance allah shmoop what is a dual currency bond Well
a currency duel would be way cooler to bonds One
dusty road in the wild west a saloon a gal
and a gun plan retired or called are paid whatever
they call bonds when they're dead Anyway a duel currency
bond is a bond where the principal and the interest
payments are made in different currencies like here's a bond
whose principal is paid off in u s dollars But
its interest is paid in euros and yeah whatever currency
being used for interest payments is called the base currency
Well why would you the investor of want one of
these things Well dual currency bonds or subject to exchange
rate risk In other words you're making a gamble not
just on an investment but on which way the exchange
rate will bounce That is if you own something it's
highly exposed two euros while then you're kind of making
a bet that the relative to the dollar the euro
zehr gonna appreciate mohr like the government's printing less of
them You have less inflation whatever because then if that
repayment currency appreciates well boom you're more in the money
Than just the interest you collected And if that currency
doesn't appreciate well there's always bank robbery is a last 00:01:21.189 --> [endTime] resort dual currency dueling currencies No
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