Fungibility Fungibility In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable. For example, since one kilogram of pure gold is equivalent to any other kilogram of pure gold, whether in the form of coins, ingots, or in other states, gold is fungible. Other fungible commodities include sweet crude oil, company shares, bonds, other precious metals, and currencies. Fungibility refers only to the equivalence of each unit of a commodity with other units of the same commodity and not to the exchange of one commodity for another, which is barter. The word "fungibility"
Commodity currency deflation. This can have negative or positive effects depending on whether the currency was overvalued or not, deflation can either be positive or negative in the long run as suggested by the effects section of the deflation article. It is important to note that while countries with commodity currencies benefit from the higher demand, countries that import this commodity face the opposite effects. Commodity currencies nature can allow foreign exchange traders to better gauge the value of a currency and predict the movements within the markets based on the perceived value of the commodity to which the currency is tied.