Hard currency refers to money that is issued by a nation that is seen as politically and economically stable. Hard currencies are widely accepted around the world, as a form of payment for goods and services, and may be preferred over the domestic currency.

A hard currency is expected to remain relatively stable through a short period of time and to be highly liquid in the forex or foreign exchange (FX) market. The most tradable currencies in the world are the U.S. dollar (USD), European euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD) and the Australian dollar (AUD). All of these currencies have the confidence of international investors and businesses, because they are not generally prone to dramatic depreciation or appreciation.

In brief:

• Hard currencies act as a liquid store of wealth and a safe haven when domestic currencies struggle.

• Hard currencies come from countries with stable economies and political systems.

• The opposite of hard currency is a soft currency.