15.10        ndian     onom
         (iv) Government expenditure to be cut by
               10 per cent per annum (the burden of
                                                             soft currency
               salaries, pensions, subsidies, etc.).      A term used in the foreign exchange market which
          The above-given conditions to which India was   denotes the currency that is easily available in any
     obliged were vehemently opposed by the Indian        economy in its forex market. For example, rupee
     corporate sector, opposition in the Parliament and   is a soft currency in the Indian forex market. It is
     majority of Indians. But by the end of 1999–2000,    basically the opposite term for the hard currency.
     when India saw every logic in strengthening its
     BoP position there was no ideological opposition        hot currency
     to the idea. It should always be kept in mind
     that the nature of structural reforms India went     Hot currency is a term of the forex market and
     through were guided and decided by these pre-        is a temporary name for any hard currency. Due
     conditions of the IMF.                               to certain reasons, if a hard currency is exiting
          This is how the direction of structural reforms an economy at a fast pace for the time, the hard
     of an economy are regulated by the IMF in the        currency is known to be hot. As in the case of the
     process of strengthening the BoP position of the     SE Asian crisis, the US dollar had become hot.
     crisis-driven economy. The purpose has been
     served in the Indian case. India has not only           heateD currency
     fulfilled these conditions but it has also moved
     ahead.                                               A term used in the forex market to denote the
                                                          domestic currency which is under enough pressure
        harD currency                                     (heat) of depreciation due to a hard currency’s
                                                          high tendency of exiting the economy (since it has
     It is the international currency in which the        become hot). It is also known as currency under
     highest faith is shown and is needed by every        heat or under hammering.
     economy. The strongest currency of the world is
     one which has a high level of liquidity. Basically,     cheaP currency
     the economy with the highest as well as highly
     diversified exports that are compulsive imports      A term first used by the economist J. M. Keynes
     for other countries (as of high-level technology,    (1930s). If a government starts re-purchasing its
     defence products, life saving medicines and          bonds before their maturities (at full-maturity
     petroleum products) will also create high demand     prices) the money which flows into the economy
     for its currency in the world and become the hard    is known as the cheap currency, also called cheap
     currency. It is always scarce.                       money.
          Upto the second world war, the best hard             In the banking industry, it means a period of
     currency was the Pound Sterling (£) of the UK,       comparatively lower/softer interest rates regime.
     but soon it was replaced by the US Dollar. Some of
     the best hard currencies of the world today are the     Dear currency
     US Dollar, the Euro(€), Japanese Yen (¥) and the
     UK Sterling Pound (£). Meanwhile, by late 2015,      This term was popularised by economists in early
     the IMF allowed the SDR to be denominated in         1930s to show the opposite of the cheap currency.
     the chinese ‘Yaan’–paving the way for a new hard     when a goverment issues bonds, the money which
     currency to be implemented in 2016.                  flows from the public to the government or the