The past few years haven’t been very great in many ways. The global economy has lately been on a rollercoaster ride. Inflation and interest rates have reached all-time highs in the last couple of years. And with the ongoing Russia-Ukraine war, economies worldwide struggle to keep pace with the rising uncertainty.
Amid this economic downturn, some countries have suffered more than others, while some have emerged stronger and stabler.
Now, if you have been following international financial updates for the past few months, you would likely have come across fluctuating forex rates and depreciating values of currencies. Currencies are losing their value and are becoming weaker with respect to the US Dollar. In other words, the US Dollar is strengthening.
So, what would you say if we ask which is the strongest currency in the world? The US Dollar, of course. Wrong!
The US Dollar is the most-traded currency in the world and, therefore, the most powerful. But it is not the strongest in terms of the exchange rate.
As far as exchange rates are concerned, USD doesn’t even appear among the top five strongest currencies. In fact, the world’s most valuable currency is over three times more valuable than the US Dollar.
Want to know more about these currencies? Here’s a list of the ten strongest currencies in the world.
(Exchange rates are current as on December 1, 2022)
Kuwaiti Dinar (KWD) – the strongest currency in the world today!
1 KWD = 3.25 USD
Kuwait might appear near the bottom of the list of the world’s largest nations. But when it comes to its currency, Kuwaiti Dinar occupies the top rank in the strongest currencies in the world. The KWD is not pegged to a single currency but a basket of currencies. However, Kuwait has not disclosed the currency names.
The economy of Kuwait, like those of other countries on the list, relies heavily on oil exports. And this reliance has kept the country’s economy and currency stable and strong for decades. As a result, the Gulf country is one of the wealthiest in the world by per capita GDP.
What’s more, Kuwait is tax-free and has a very low unemployment rate!
Bahraini Dinar (BHD)
1 BHD = 2.66 USD
Since Bahrain’s economy largely relies on oil and gas exports, the country enjoys constant demand from countries around the world.
The second-highest valued currency in the world– the Bahraini Dinar– is also heavily dependent on the country’s oil exports. The Bahraini Dinar is also pegged to the USD at the rate of 1 USD = 0.376 BHD. The Central Bank of Bahrain manages issues and controls the currency.
Omani Rial (OMR)
1 OMR = 2.60 USD
Oman’s economy flourishes due to the country’s oil reserves. The oil exports of the county keep the Omani Rial in constant demand, hence catapulting the OMR’s growth. But what makes the OMR so strong is that it is pegged to the USD.
One OMR is equal to 2.6008 USD and therefore becomes the third strongest currency in terms of value. The pegging keeps the economy in check and ensures stability and protection from market volatility.
Jordanian Dinar (JOD)
1 JOD = 1.41 USD
The national currency of Jordan, the Jordanian Dinar, has been in official use since 1950. Each Jordanian Dinar is equal to 100 qirshes and 1000 fils. The Central Bank of Jordan manages and controls the Jordanian Dinar.
Jordan enjoys having the fourth most-valuable currency mainly because it is also pegged to the US Dollar. Each USD is equivalent to 0.709 JOD.
Caymanian Dollar (KYD)
1 KYD = 1.22 USD
The Cayman Islands is a chain of three islands in the Caribbean Sea. The island chain is a haven for companies due to minimal regulatory restrictions in the territory. As a result, the three islands are home to over 117,000 companies. This is a primary reason for the Cayman Dollar’s strength.
The KYD is pegged to the USD at the rate of 1 USD = 0.8333 (approx). The territory’s monetary authority manages the currency. As a result, the value of KYD remains fixed with respect to USD.
British Pound Sterling (GBP)
1 GBP = 1.21 USD
The British Pound is the native currency of the United Kingdom and many other British territories. It is also the oldest active currency in the world. Each British Pound consists of 100 pennies.
The GBP comes fourth in the list of most-traded currencies after the US Dollar, the Euro, and the Japanese Yen. However, it is not the stablest of all currencies. Like other floating currencies, the GBP fluctuates with the UK’s changing political and socio-economic situations.
Swiss Franc (CHF)
1 CHF = 1.06 USD
Three characteristics define an ideal currency: security, minimal risks, and protection from inflation. The Swiss Franc checks all three conditions and is one of the best alternatives after the US Dollar and the Euro.
Switzerland enjoys the world’s trust when it comes to financial security, which reflects in the Swiss Franc. The CHF has served as the best alternative in the 2008 crisis and the European debt crisis of 2009-13. Clearly, Switzerland’s native currency is the apple of investors’ eyes.
Euro (EUR)
1 EUR = 1.04 USD
The Euro is among the youngest currencies in the world and the youngest on this list. It is the legal tender in 19 of the 27 countries of the European Union. It is the official currency of several non-EU countries, while some other countries have pegged their currency to the Euro.
EUR is also the second-most traded currency, accounting for over 30% of daily forex trades as of 2019. And likewise, it is also the second-largest reserve currency.
United States Dollar (USD)
1 USD = 1 USD (Duh!)
The US Dollar is not among the top five most valuable currencies but is certainly among the top ten. But in effect, the value of USD with respect to other currencies has nothing to do with its undisputed supremacy.
The USD is the most-traded currency in the world and, therefore, the most powerful. Over 80% of the world’s daily trade relies on USD today. And therefore, the fate of almost every currency, directly or indirectly, depends a lot on the USD.
Canadian Dollar (CAD)
1 CAD = 0.75 USD
The official currency of Canada currently ranks tenth among the strongest currencies in the world in terms of value. The stability and low debts have made the Canadian Dollar a benchmark currency. This means that many countries worldwide have CAD as a reserve currency.
The CAD has been in circulation since 1858 but has undergone numerous policy changes. It has been pegged with USD and depegged multiple times but has been floating freely since 1970. It is also the seventh most-traded currency, accounting for five percent of daily volume (as of 2019).
Closing thoughts
The strength of a country’s economy depends on many factors, and currency is one of them. A strong currency reflects the nation’s economic stability, strength, and viability. To some extent, it also represents the living standards of the people.
In terms of exchange rates, the currencies mentioned above are currently the strongest currencies in the world. However, you must remember that exchange rates do not always represent the currency’s overall strength. Factors like trading reserve volumes also matter a lot.
Did you find this blog as valuable as the currencies we mentioned? Tell us your thoughts below. If you like reading about informational topics, check out our Around the World section!