Question

Residents of a South American country are not allowed to convert their currency into other currencies. However, all foreign businesses with deposits in banks there may, at any time, convert all their currency into foreign currency and take it out of the country. The currency in this country is

Answer 1

Answer: Externally Convertible.

Explanation:

Externally convertible currencies are those currencies which have such a heavy restriction on their trade that the country's own residents are forbidden to convert it into foreign currency.

In a bid to allow some sort of investment however, the Government will allow non-residents such as foreign businesses to convert currency so as to be able to freely conduct their businesses without fear of being unable to gain adequate returns.