Top Ten Weakest World Currencies in 2023
The US dollar is the most common currency that comes to mind when discussing the World’s strongest currencies. Indeed 60Pct of global trade is conducted in USD. To everyone’s astonishment, the Kuwaiti dinar (KWD), not the US dollar, is the strongest currency in the World.
When assessing a country’s economic health, the foreign exchange rate is crucial. It offers an understanding of the nation’s economic prospects. The exchange rate determines the value of a country’s currency. The rate does not remain constant. It changes frequently depending on market realities.
In recent times, several countries have experienced a significant decline in the value of their currencies due to various factors such as political instability, economic mismanagement, and global economic conditions. Some examples of depreciated currencies include the Venezuelan bolivar, the Zimbabwean dollar, and the Turkish lira.
| Rank | Currency | Exchange Rate | Depreciation Since January 1, 2022 |
|---|---|---|---|
| 1 | Zimbabwean RTGS Dollar | 6,100 RTGS/USD | -96.72% |
| 2 | Venezuelan Bolivar | 33.37 VES/USD | -85.38% |
| 3 | Lebanese Pound | 89,300 LBP/USD | -69.20% |
| 4 | Cuban Peso | 232.00 CUP/USD | -68.97% |
| 5 | Syrian Pound | 11,700.00 SYP/USD | -68.80% |
| 6 | Argentine Peso | 574.00 ARS/USD | -63.76% |
| 7 | South Sudanese Pound | 997.63 SSP/USD | -56.40% |
| 8 | Sierra Leonean Leone | 21,093.36 SLL/USD | -52.02% |
| 9 | Turkish Lira | 27.00 TRY/USD | -50.73% |
| 10 | Egyptian Pound | 30.94 EGP/USD | -49.00% |
Source: Hanke’s Currency Watchlist
Computed by Steve H. Hanke, The Johns Hopkins University
Ethiopia’s birr is another currency that has hugely depreciated against the USD. Ethiopia currently takes 16th place on Hanke’s currency watchlist, with -39.53% depreciation (107.50 ETB/USD exchange rate). The country has been facing a severe foreign currency shortage, which has led to a decline in the value of its local currency, the birr.
The decline in foreign aid, loan, FDI and remittances due to the COVID-19 pandemic and the country’s precarious peace and security over the past three years contributed to the country’s severe foreign currency shortage.
Ethiopia has been borrowing heavily from foreign lenders to finance infrastructure projects, which has increased external debt. Debt servicing has put pressure on the country’s foreign exchange reserves, leading to a depreciation of the birr. The depreciation of the birr has made imports more expensive, leading to higher inflation rates and reduced purchasing power for Ethiopians.
11th Year • July 2023 • No. 119 EBR
Ethiopian Business Review
