Inconvertible Currency

  

Categories: Forex

Oh, the forbidden fruit.

An inconvertible currency is what it sounds like: a currency you can't convert. That is, a currency that’s been blocked via government intervention, or possibly physical reasons, creating a situation where you can’t exchange money to get that currency on foreign exchange markets.

For instance, if a currency suffers from hyperinflation to the point that it makes more sense to use it as toilet paper than to use it to buy toilet paper...then government regulators may make the currency inconvertible to prevent investors from...well, investing poorly.

While hyperinflation is the usual reason for this unusual situation, inconvertible currencies might also be a thing when a government is clamping down on control, either for domestic or international political reasons.

Don’t ask too many questions. You won't hear too many lies.

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