15.10 ndian onom
(iv) Government expenditure to be cut by
10 per cent per annum (the burden of
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