Question:
Foreign currency which has a tendency of quick migration is called ____________.
Foreign currency which has a tendency of quick migration is called ____________.
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Remember that "Hot money" refers to highly volatile, speculative capital that flows quickly into and out of countries, often causing sudden fluctuations in local exchange rates.
Updated On: Jul 24, 2026
- Quick money
- Fast money
- Hot money
- Soft money
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The Correct Option is C
Solution and Explanation
Step 1: Understanding the Concept:
In international finance, certain types of capital or foreign currencies are highly sensitive to changes in interest rates, exchange rates, or economic stability, causing them to move rapidly between countries.
Detailed Explanation:
Let us define the financial terms:
- Quick/Fast money: Informal terms used to describe rapid financial gains, not standard economic classifications of foreign currency.
- Soft money: A currency that is unstable, easily depreciates, and is not widely accepted for global transactions.
- Hot money: Capital or foreign currency that is held in short-term financial assets and is moved rapidly by investors from one country to another to take advantage of short-term interest rate differentials or expected exchange rate movements. This high tendency of quick migration makes it volatile.
Step 2: Final Answer:
The term is Hot money, which corresponds to Option (C).
In international finance, certain types of capital or foreign currencies are highly sensitive to changes in interest rates, exchange rates, or economic stability, causing them to move rapidly between countries.
Detailed Explanation:
Let us define the financial terms:
- Quick/Fast money: Informal terms used to describe rapid financial gains, not standard economic classifications of foreign currency.
- Soft money: A currency that is unstable, easily depreciates, and is not widely accepted for global transactions.
- Hot money: Capital or foreign currency that is held in short-term financial assets and is moved rapidly by investors from one country to another to take advantage of short-term interest rate differentials or expected exchange rate movements. This high tendency of quick migration makes it volatile.
Step 2: Final Answer:
The term is Hot money, which corresponds to Option (C).
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