Hard currency is the symmetry of "soft currency", also known as coin. It has three meanings: ① refers to metal currency, such as gold, silver and its coins. ② refers to the currency with good international credit, stable currency value and strong exchange rate. In today's world, due to the differences in economic and technological level and macroeconomic policy orientation, the inflation level of different countries is often different, and there are also great differences in international payments and foreign exchange control. When a country's inflation rate is relatively low and its balance of payments is in surplus, its currency value is relatively stable and its exchange rate is firm. In the international financial market, it is customary to call the domestic currency "hard currency" or "strong currency". (3) It refers to some currencies that can be freely and unrestricted exchanged for gold and other national currencies that are not subject to foreign exchange control in the international financial market after the Second World War, such as US dollars, British pounds and German marks. In addition, currencies with relatively strong exchange rates in the international financial market are also called hard currency.
The characteristics of hard currency are: it can be freely exported without the approval of the foreign exchange administration department, can be freely exchanged for gold or other countries' currencies, and can be paid to third countries. Therefore, these hard currencies can be used as international currencies, accounting for a large proportion in the international reserves of various countries. Because hard currency is highly convertible and generally accepted, and the exchange rate is relatively stable, all countries are willing to export a large number of goods to countries that pay in hard currency.
Hard currency refers to a currency with good international credit, stable currency value and strong exchange rate. Due to the different levels of inflation, balance of payments and foreign exchange control in different countries, when a country has a low inflation rate and a surplus balance of payments, its currency value is relatively stable and its exchange rate is firm. In the international financial market, it is customarily called hard currency.
Hard currency is not fixed, and whether a country's currency will become hard currency is mainly influenced by the country's economic growth, inflation, balance of payments and other factors besides the above characteristics.
In international trade, hard currency settlement is generally beneficial to exporters. In international credit, hard currency loans are beneficial to creditors. Keeping foreign hard currency in international reserves is conducive to the stability of the value of reserve assets and can avoid and mitigate the risks brought about by fluctuations in the international financial situation. Therefore, when the foreign exchange market fluctuates, hard currency becomes the object of snapping up.
Hard currency and soft currency are only relative, and it will change with the change of national economic and financial situation. For example, the dollar was a hard currency in the 1950s. In the late 1960s and 1970s, due to the high inflation rate and large balance of payments deficit in the United States, the exchange rate of the US dollar showed a downward trend, and the US dollar changed from hard currency to soft currency. Since the early 1980s, the United States has implemented high interest rates and tight monetary policies, and the exchange rate of the US dollar has been rising continuously, becoming a hard currency in the international financial market.