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Q.

What are the parameters that determine Convertibility of currency of a country???

Tags: travel, news & events, politics & government
Asked by Siachen, 28 Aug '09 03:01 pm
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Answers (3)

1.

Currency Convertibility means the ease with which a country's currency can be converted into gold or another currency. Convertibility is extremely important for international commerce. When a currency in inconvertible, it poses a risk and barrier to trade with foreigners who have no need for the domestic currency.
Government restrictions can often result in a currency with a low convertibility. For example, a government with low reserves of hard foreign currency often restrict currency convertibility because the government would not be in a position to intervene in the foreign exchange market (i.e. revalue, devalue) to support their own currency if and when necessary.
Answered by trivikram, 28 Aug '09 03:20 pm

 
  
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2.

It is country specfic taking into consideration inflation, global economic condition, exchange rate, FDI
Answered by saranathan Narasimhan, 28 Aug '09 03:26 pm

 
  
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3.

Resopective country reserve bank/centra bank give directives on this in relation to otgher country to tehir own banks
Answered by Dinesh C S, 31 Aug '09 01:52 pm

 
  
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