Q. Consider the following statements regarding hard currency:
1.They are easily exchangeable and commonly used in international transactions.
2.Indian rupee is one of the hard currencies.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A

Explanation: Hard currencies are easily exchangeable, commonly used in international transactions, and generally expected to be stable in the short term.

  • Hard currencies are also widely held as foreign exchange reserves by central banks.
  • Up to the Second World War, the best hard currency was the Pound Sterling (£) of the UK, but soon it was replaced by the US Dollar.
  • Some of the best hard currencies of the world today are the US Dollar, the Euro (€), Japanese Yen (¥) and the UK Sterling Pound (£).
  • Meanwhile, by late 2015, the IMF allowed the SDR to be denominated in the Chinese ‘Yaan’–paving the way for a new hard currency to be implemented in 2016.

Source: TMH Ramesh Singh