Soft Currency

See: Hard Currency.

Just as you purport to be, currencies are hard on the outside, but soft on the inside. Well, some of them.

Soft currencies are currencies that fluctuate easily due to political and/or economic uncertainty or instability...usually fluctuating downward. Soft currencies imply pliability, meaning they’re seen as weak currencies.

While some investors might flock to soft currencies, they’re doing so because it’s risky, and because nobody else is doing it. Um...because it’s risky. Most investors stay away from soft currencies, preferring to deal with more predictable and stable currencies. Not just investors, but big ’uns (like central banks) will often stay away from soft currencies.

Generally, countries with higher GDP per capita have more stable currencies, and countries with lower GDP per capita have softer currencies. Venezuela, a country largely dependent on its oil production, is known for its soft currency...and it shows. They’ve been in a recession for a while due to softness in global oil demand. They bet the ranch on oil and, well, they're losing the ranch.

And that's petro oil, not bodybuilder oil. Just so we’re clear.