Soft currency.
Almost all reserves of national banks are in hard world currencies, but along with this term, the opposite meaning is often found - soft currency.
Deciphering this concept will help you better understand other Forex terms. A soft currency is a weak monetary unit, usually having low liquidity and practically zero collateral.
These currencies are poorly quoted on the world foreign exchange market and are circulated only within their own country.
• Unstable exchange rate – this payment unit changes its value in relation to other currencies literally before our eyes. Price changes in most cases are aimed at reducing its cost. Within a month, this payment instrument may lose more than one hundred percent in value in relation to major world currencies.
• Weak economy of the issuer's country - soft currencies most often belong to the economies of developing countries with high inflation rates and an unstable political situation within the country.
• Low liquidity – such a currency is difficult to sell on the exchange; it is practically not in demand among buyers.
• Inconvertibility - soft currency is practically impossible to sell or buy in other countries; it is circulated only in a limited area.
A soft currency is not a nominal indicator of monetary units; after the economy strengthens and a positive balance of payments appears, any of the currencies can change its status and become hard. This is what happened with many currencies after the governments of the issuing countries took effective measures to improve the economic and political situation in the country.
True, sometimes the opposite trend is possible as a consequence of armed conflicts, defaults and natural disasters.
You can find out the current rates of hard currencies here Forex Quotes .