From Latin fungi (to perform in place). Earliest documented use: 1765.
When you lend someone a dollar bill, you don’t care if he returns the same bill or a different one because money is fungible. Same with things such as gold, a cup of sugar, etc. However, if you lend someone your cell phone, you wouldn’t be pleased if he returned a different phone even if it’s exactly the same model. That would be an example of something nonfungible.
"Forbidden to own land for most of our two millennia of exile, we gradually became experts in accumulating capital, which is portable, easily inheritable, fungible, and expandable."
Ellen Frankel; Taking Stock; The Jerusalem Report (Israel); May 19, 2014.