Soft currency is a term used to describe a currency that is not widely accepted or valued in international markets. It typically refers to a currency that is not stable or has limited convertibility. Soft currencies are often associated with countries experiencing economic instability, high inflation rates, or political uncertainties.

The value of a soft currency tends to fluctuate significantly, making it risky for international trade and investment. Foreign entities may be hesitant to accept or hold soft currencies due to concerns about their future value and the potential difficulties in converting them into other, more stable currencies.

As a result, soft currencies may face challenges in international transactions, such as limitations on their use in global trade or restrictions on converting them into hard currencies. This can impact a country's ability to attract foreign investment, conduct international trade, and maintain stable economic conditions.

To mitigate the risks associated with soft currencies, some countries may implement measures such as currency controls, exchange rate interventions, or seek external assistance from international financial institutions to stabilize their currency and restore confidence in their economy.

A soft currency is a currency that is unstable and tends to lose value quickly compared to stronger, more reliable currencies. It is often found in countries with weak economic conditions, high inflation, or political instability. Because of these factors, investors and traders usually avoid holding soft currencies for long periods. Instead, they prefer hard currencies like the US dollar or euro, which are more stable and widely accepted for international trade. The value of a soft currency can fluctuate sharply, making imports more expensive and increasing economic uncertainty. Governments of countries with soft currencies often try to stabilise them by improving monetary policy, controlling inflation, or building stronger foreign exchange reserves.