The currency strength of a country is a signal for the economic health and the safety of a country.
A strong currency indicates factors such as economic growth, low inflammation and a strong trade balance. A country with a strong currency can attract foreign investors, which can lead to a boost in the political strength of the country. Meanwhile, a country with the weakest currencies does the opposite.
What is currency strength?
The currency strength of a country is the relative value of a currency to the other currency.
The currency strength indicates how much a country would a country need to purchase something in comparison to the other country. Thus it is important to know about the strongest and the weakest currency.
What makes a currency weak or strong?
Economic factors like Inflation:
The inflation of the country weakens the currency of a country, because It reduces the purchasing power of that country. When inflation increases the cost of services and goods increases, this means that a unit currency would buy less than it did before.
By seeing the higher prices of the goods the investors show less interest in buying, thus they try to sell off the currency of the country they are investing in.
Similarly, if the country is facing less inflation, the opposite would happen.
Political stability:
This can be understood by the example of the Russian Ruble, The russian ruble hit 110 for the US dollar after the US provoked sanctions Gazprombanks(Russian bank)
Thus when the country is facing turmoils like internal or external conflicts, the country faces a major fall in currency strength.
Thus to know about the weakest currencies of the world helps in understanding the economic development of the country.
Commodity Prices:
For countries heavily reliant on commodity exports, changes in commodity prices can influence the value of their currency.
Top 10 weakest currencies in the world
10. Malagasy ariary (1 USD = 4512.5 MGA)
Madagascar’s, Malagasy ariary (MGA), is one of the weakest currencies because of political instability, particularly following the 2009 coup, resulting in the suspension of foreign aid, loss of investment, and failure of major sectors such as tourism. The economy contracted, inflation increased, and trade deficits expanded, further weakening the currency. Poor governance, corruption, and sluggish recovery have maintained the economy vulnerable, making the ariary weak relative to significant world currencies.
9. Paraguayan Guarani (PYG) (1 USD=7,993.00)
Paraguay has a small, agriculture-based economy with limited industrialization and global influence. Although relatively stable politically compared to some neighbours, Paraguay has a low GDP compared to major economies, relies heavily on exports like soy and beef, and has historically experienced inflation and currency devaluations. Its limited role in global trade and modest economic development keep the guaraní’s value weak against stronger currencies like the US dollar and euro. This is the reason why it is on the 9th of our weakest currencies list.
8. Guinean franc (GN) (1 USD= 8,653.18)
Guinea has faced decades of political instability, weak governance, corruption, and poor economic management since its independence. Despite being rich in natural resources like bauxite and gold, most of the wealth has not benefited the broader economy. High inflation, frequent currency devaluations, low foreign investment, and dependence on a few exports have kept the Guinean franc weak against major world currencies.
7. Uzbekistani Som (UZS) (1 USD =12,917.36 UZS)
The Uzbekistani som (UZS) is one of the weakest currencies because of years of economic isolation after the fall of the Soviet Union, heavy government control over markets, and inflation during its early independence. Until 2017, Uzbekistan operated under strict currency controls that distorted its real value. Even after reforms, low GDP per capita, limited integration into global markets, and historical inflation have kept the SOM among the weakest currencies in the world.
6. Indonesian Rupiah (1 USD=16,828.10)
The Indonesian rupiah (IDR) is considered one of the weakest currencies primarily due to historical hyperinflation in the 1960s, during which Indonesia experienced severe economic instability and loss of confidence in its financial system. Although Indonesia today has a much stronger and growing economy, the rupiah remains weak because of its large money supply, vulnerability to external shocks, reliance on commodity exports, and global perception of risk in emerging markets. These factors have contributed to the IDR remaining one of the weakest currencies when compared to the US dollar and euro.
5. Laotian Kip (LAK) (1 USD =21,613.70 Laotian Kip)
Ranking fifth on our list of the weakest currencies, the Indonesian rupiah (IDR) reflects a long history of economic challenges. The devastating hyperinflation of the 1960s severely weakened public trust in the currency, a legacy that continues to affect its value today. Despite Indonesia’s significant economic growth and modernization, factors such as a large circulating money supply, exposure to global commodity price fluctuations, and sensitivity to international market risks have kept the rupiah among the weakest currencies relative to stronger economies like the United States and the European Union.
4. Sierra Leonean Leone (SLL) (1USD =22,558.30 SLL )
The Sierra Leonean leone (SLL) takes the fourth spot on our list of the weakest currencies, a position shaped by decades of economic struggle. Sierra Leone, having suffered through a brutal civil war and facing a slow post-war recovery, still deals with the consequences in its currency. The country’s economic reliance on mining, particularly diamonds, and its vulnerability to global commodity price fluctuations continue to drag down the value of the leone. With inflation rates often soaring and limited industrial development, the leone’s purchasing power remains weak in comparison to stronger currencies.
3. Vietnamese Dong (VND) (1USD= 26,000.00)
Sitting in the third position among the weakest currencies, the Vietnamese dong (VND) carries the weight of a history shaped by war and economic reform. While Vietnam has made significant strides since the Doi Moi reforms of the 1980s, the dong still faces challenges tied to inflation and a large supply of money circulating in the economy. Although Vietnam has become a rising player in manufacturing and exports, the dong’s value remains tethered by its dependence on external factors like trade imbalances and global commodity fluctuations. Despite the country’s development, the dong remains one of the weakest currencies when compared to major global currencies.
2. Iranian Rial (IRR) (1USD=42,100.00)
The Iranian rial (IRR) has long held 2 positions among the weakest currencies due to economic mismanagement, international sanctions, and high inflation rates. Despite Iran’s vast reserves of oil and natural gas, these sanctions have severely limited its access to global markets, undermining confidence in the rial. Coupled with internal economic challenges, such as corruption, inefficient state-run industries, and a lack of diversification, the rial remains highly devalued, with inflation often reaching staggering levels. These factors ensure the rial continues to struggle, remaining one of the weakest currencies in the world.
1. Lebanese Pound (LBP) (1 USD=89,528.42)
At the very bottom of our list, the Lebanese pound (LBP) is arguably the weakest currency today, plummeting drastically due to Lebanon’s ongoing financial and political crisis. The country has been crippled by severe economic mismanagement, political instability, and a devastating banking crisis, leading to hyperinflation. Once pegged to the US dollar, the pound has now devalued by over 90% in recent years. With no clear path to recovery, the LBP’s value is in freefall, making it the weakest currency in the world, with widespread poverty and loss of savings affecting the Lebanese population.
What is the rank of India in currency strength?
India’s currency, the Indian Rupee (INR), does not fall among the weakest currencies in the world. However, it has experienced fluctuations and a slow decline in value against major currencies like the US dollar and euro. The rupee’s value is influenced by factors such as India’s trade balance, inflation rates, and foreign investment. While the country has a rapidly growing economy and a strong industrial and technological sector, the rupee faces pressure due to its dependency on imports, especially crude oil, and global market conditions. Though it is not considered one of the weakest currencies, the Indian rupee is vulnerable to external economic factors and remains weaker than currencies from more developed economies.
FAQ related to the weakest currencies
No, a weak currency does not automatically mean a weak economy. A weak currency can be a signal of certain economic difficulties, but it doesn’t automatically mean the overall economy is weak. It’s important to consider other economic indicators and the broader context of the economy
The Japanese yen is weaker compared to the Indian rupee on account of various reasons such as Japan’s long history of low interest rates, monetary easing policy, and its attempts to counter deflation. These policies have maintained the value of the yen low to support exports and stimulate the economy.
Japan’s high national debt and low inflation are also factors in the yen’s relative weakness. Conversely, India’s fast-developing economy, with robust sectors such as IT and infrastructure, has created a high demand for the rupee, making it stronger. Although Japan’s economy is developed, the value of its currency is driven by various economic forces than India’s developing economy.
The stock exchange can impact the value of currency in a variety of ways, mostly through economic prospects, capital movements, and investor attitudes. A performing country stock market can draw in foreign investment, which means acquiring the home currency, thus raising demand and increasing its value. If a nation’s stock market drops, foreign investors can withdraw their capitals, causing the demand for the currency to drop and it can weaken.
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