Hard Currency
What It Is:
Hard currency is currency that has been adopted as an acceptable payment method in multiple countries.
How It Works/Example:
Hard currencies are generally issued by developed countries that have a strong industrial economy accompanied by a stable government. The most common hard currencies include the U.K. pound sterling (GBP), the euro (EUR) and U.S. dollar (USD).
Why It Matters:
Hard currencies display high stability and typically experience only minor short-term fluctuations in the foreign exchange market. Hard currencies are frequently used to denominate commodities and serve as a benchmark for foreign exchange markets. As a result, instability in hard currencies can lead to a loss in confidence with worldwide effect on markets.
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Cached on May 23, 2012, 5:07 pm