Currency Convertibility

If we gave you a few thousand Mozambican meticals (the currency of Mozambique), where would you go to get that converted into dollars? It would probably take you awhile to find a place.

If you had a handful of euros or yen or Canadian dollars, the local branch of your bank would probably help you. You might even be able to go to the front desk of a fancy hotel. But you may just have to hang onto those meticals until the next time you head to Mozambique.

Currency convertibility measures the ease or difficulty one currency has in being changed into other currencies, or into gold. The widely dispersed international currencies (like the U.S. dollar and the euro) have very high convertibility. Smaller currencies have a much harder time finding a market.