Currency assets are assets that have a fixed value in terms of a specific currency, and that can be easily converted into cash or other currencies. Currency assets are also known as monetary assets, as they are one of the functions of money, along with being a unit of account and a store of value. Currency assets can help investors diversify their portfolio, enhance their returns, reduce their risks, and hedge against currency fluctuations. In this article, we will explore some examples of currency assets, and how they differ from non-currency assets.
Cash
Cash is the most basic and liquid form of currency asset, as it represents the physical or electronic money that is accepted as a medium of exchange for goods and services. Cash can be held in different currencies, such as US dollars, euros, yen, etc., depending on the preference and the location of the holder. Cash can also be stored in different forms, such as banknotes, coins, bank deposits, or digital wallets. Cash can be easily exchanged for other currencies, or used to purchase other assets, at the prevailing exchange rates.
Accounts Receivable
Accounts receivable are the amounts of money that are owed to a business or an individual by its customers or clients, for the goods or services that have been delivered or performed, but not yet paid for. Accounts receivable are denominated in a specific currency, usually the currency of the seller or the buyer, depending on the agreement. Accounts receivable can be considered as currency assets, as they represent a claim or a right to receive a certain amount of money in the future, and can be converted into cash or other currencies upon collection.
Fixed Income Investments
Fixed income investments are the securities or instruments that pay a fixed or predetermined amount of interest or income to the investors, such as bonds, notes, certificates of deposit, or treasury bills. Fixed income investments are usually denominated in a specific currency, such as the currency of the issuer or the market, depending on the type and the location of the investment. Fixed income investments can be considered as currency assets, as they represent a contractual obligation or a promise to pay a certain amount of money in the future, and can be converted into cash or other currencies upon maturity or sale.
Currency-Related Assets
Currency-related assets are the assets that are directly or indirectly linked to the performance or the movement of one or more currencies, such as foreign stocks, funds, or derivatives. Currency-related assets are usually denominated in a specific currency, such as the currency of the underlying asset or the market, depending on the nature and the structure of the investment. Currency-related assets can be considered as currency assets, as they reflect or replicate the value or the change of one or more currencies, and can be converted into cash or other currencies upon redemption or settlement.
Non-Currency Assets
Non-currency assets are the assets that do not have a fixed value in terms of a specific currency, and that are not easily converted into cash or other currencies. Non-currency assets are also known as non-monetary assets, as they are not one of the functions of money, and do not serve as a medium of exchange, a unit of account, or a store of value. Non-currency assets can include tangible or intangible assets, such as property, plant, equipment, inventory, goodwill, patents, trademarks, etc. Non-currency assets can vary in value depending on various factors, such as market conditions, supply and demand, technology, innovation, etc.
Conclusion
Currency assets are assets that have a fixed value in terms of a specific currency, and that can be easily converted into cash or other currencies. Currency assets can help investors diversify their portfolio, enhance their returns, reduce their risks, and hedge against currency fluctuations. Some examples of currency assets are cash, accounts receivable, fixed income investments, and currency-related assets. Currency assets differ from non-currency assets, which are assets that do not have a fixed value in terms of a specific currency, and that are not easily converted into cash or other currencies.