BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A currency whose exchange rate has a tendency to fluctuate
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A currency which can be easily used for settling any International transactions.
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A currency which can not be used for settling international transactions because it does not command a value in the international market
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A currency which is available by way of soft loans from international agencies
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Detailed explanation-1: -A soft currency is one with a value that fluctuates, predominantly lower relative to other currencies, because there is less demand for that currency in the forex markets. This lack of demand may be driven by a variety of factors, but is most often a result of the country’s political or economic uncertainty.
Detailed explanation-2: -Soft currency, also known as weak currency, is legal tender money sensitive or volatile to market conditions. Its value is less than other currencies as traders and investors prefer holding it less. So, the prime reason any currency turns soft is its declining demand and lower acceptance in the global market.
Detailed explanation-3: -Hard currency is a stable and reliable form of currency that is issued by the government and widely accepted around the world. Soft currency is an unstable form of currency that is unconvertable, fluctuates erratically, and/or depreciates against other currencies.
Detailed explanation-4: -Such currencies mostly exist in developing countries with relatively unstable governments. Soft currencies cause high volatility in exchange rates as well, making them undesirable by foreign exchange dealers. These currencies are the least preferred for international trade or holding reserves.