A currency becomes weak if a country’s exchange rate is regressing as a result of internal policies, inflation and the bad economic situation. The value of a currency depends on the demand and supply, while some are pegged at an agreed rate. The foreign exchange rate is an indicator of a country’s economic wealth.
Exchange rates are not usually stable, they fluctuate as dictated by the market. Let’s quickly talk about factors that determine foreign exchange. They are Inflation and Interest rates.
Below are the weakest currencies in the world.
10. Iraqi Dinar (IQD)
The Iraqi Dinar is the official currency of Iraq. Inflation has rendered the currency one of the weakest currencies in the world. Political instability is a major contributor to the state of Iraqi Dinar. The currency is issued by the Central Bank of Iraq and its first circulation was on April 1, 1932, replacing the Indian Rupee which had been the country’s official currency since World War One. The United States one dollar equals 1,312 Iraqi Dinar.
9. Ugandan Shilling (USH)
The Ugandan Shilling became weak due to Uganda’s policies that have had a negative impact on the economic status of the country. The East African Shilling was replaced with the Ugandan Shilling in 1966. Another shilling was introduced in 1987 due to high inflation. One US dollar equals 3,938 Ugandan Shillings at the moment.
8. Paraguayan Guarani (PYG)
Paraguayan Guarani has been affected by high inflation, poverty, unemployment and corruption. Paraguay is one of the poorest countries in South America. Even though the country exports soybeans and cotton, the economic situation has overpowered its effect. Currently, one US dollar trades at 7,278 Paraguayan Guarani.
7. Guinean Franc (GNF)
Guinean Franc is the official currency of Guinea. Political instability and corruption led the currency to its weak state. Sadly, every year, the currency devalues despite having natural resources like gold, aluminium, and diamonds. One US dollar is currently equivalent to 8,597 Guinean Franc.
6. Uzbekistani Som (UZS)
So many efforts have been employed to improve the economy of Uzbekistan but have been fruitless. The industrial output of the country has really declined which is also affecting the currency value. Important to note that Uzbekistan is still grappling with the effect of Covid-19 pandemic on the economy. As of now, one US dollar is equivalent to 12,501 Uzbekistani Som.
5. Indonesian Rupiah (IDR)
The Indonesian Rupiah has failed to improve over the years. This can be traced to decreasing foreign exchange reserves and the dependence of Indonesia on the export market. All efforts to strengthen the national currency have been abortive. One US dollar equals 15,562 Indonesian Rupiah at the moment.
4. Laotian Kip (LaK)
Laotian Kip is the official currency of Laos People’s Democratic Republic. This currency was never devalued but was issued at a very low rate in 1952. The Central Bank of Lao maintains the currency, but it’s among the weakest in the world. The current exchange rate of one US dollar in Laos People’s Democratic Republic equals 20,900 Laotian Kip.
3. Sierra Leonean Leone (SLL)
The value of Leone declined drastically due to corruption and other financial scandals in Sierra Leone. Poverty is also another factor, which led to the downfall of the economy. Leone was introduced in 1964 as a replacement of the British West African pound. 20,969 Sierra Leonean Leone is side-by-side with just one US dollar at the moment.
2. Vietnamese Dong (VND)
Vietnamese Dong is the official currency of Vietnam. The economic situation in the country devalues the currency. The transitioning from a centralized economy to a market based one devalued the currency. The State Bank of Vietnam manages the currency. Vietnam’s currency exchanges at 24,639 Vietnamese Dong to one US dollar.
1. Iranian Rial (IRR)
The Iranian Rial has been affected by different kinds of crises. In 1979, the termination of the Islamic Revolution made foreign investors withdraw from the country; the nuclear programme and political unrest are factors that contributed to the weakness of the currency. As of now, one US dollar is equivalent to 42,055 Iranian Rial.
