Forex Dictionary Terms

Junk Currency

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Definition – What does Junk Currency mean?

Junk currency is a slang term for the money of a nation that is seen to be inflating or otherwise destroying the purchasing power of that money. The term junk currency implies that the currency is losing value rapidly and will soon be worthless. Some people believe this term applies to all fiat currencies because of the fact that they are not backed by hard assets like gold.

ForexTerms explains Junk Currency

The U.S. dollar has often been called a junk currency due to the inflation targets, government spending and other economic factors. Whether the U.S. dollar will become worthless anytime soon is debatable, but there are always nations in the world that are in danger of seeing their currency drop to junk status. Hyperinflation and economic hardship are two common signs that a currency may be in trouble.

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