Question

Convertible currency advantages and disadvantages

Answer 1

Advantages

encourage to exports
receive import substitution

disadvantage

it generate costs push inflation in economy

it leads to depreciation of domestic currency if it is not properly manage.

Answer 2

An important advantage of currency convertibility is that it encourages exports by increasing their profitability. With convertibility profitability of exports increases because market foreign exchange rate is higher than the previous officially fixed exchange rate

disadvantage
Cost push inflation may result of market determined exchange rates are higher than officially fixed exchange rates and prices of essential imports rise