Top 15 Strongest Currencies in the World
November 2, 2023
Trading in forex, you should understand the importance of the famous and strongest currencies in the world. There are 180 currencies in circulation in the world. So, you will find different types of currency pairs in forex. But not all of them are equal in terms of value. Some currencies are more valuable than others. It doesn’t mean that some countries are richer than others, but they have a stronger economy that often correlates with a country’s GPD and stability.
In order to be a successful trader, you need to know the strongest currencies in the world because the difference in the exchange rate can have a low impact on international businesses. So, as a Trader or a merchant, you are required to check the value of the country’s currency. Here at Aron Groups, we will talk about everything you need to know to find out about the strongest communities in the market.
Table of Contents
How do we determine the strengths of currencies?
A number of internal and external economic factors determine the strength of a currency. Internal factors are as follows:
- The amount of foreign capital central bank reserves.
- The supply and demand in forex exchanges
- The country’s balance of trade
- Inflation rate
- Employment rate
read more: How to Find the Best Pair to Trade in Forex
External factors are as follows:
- Acceptability of a currency in international trade
- The purchasing power with respect to the exchange rate
Central banks keep significant amounts of foreign currencies, which are called reserve currency, to conduct international business.
It is interesting to note that 94% of all foreign reserves in the world are held in just five currencies, and you will find the US dollar in 59% of them. In order to determine the strengths of a currency, you need to consider the foreign exchange trading volume. By foreign exchange trading volume, we are talking about buying and selling currencies of two different countries in prayers to measure the value of one country against another. Interestingly, EUR/USD is the most common currency pair in the world.
On the other hand, the exchange rate, which is the value of the word’s respective currency that is being exchanged for another, is another determinant factor when it comes to the strengths of a currency.
For example, that’s considered the Euro, which is traded in 19 countries of the European Union. The Exchange rate regime is another factor in determining the strength of a currency and is referred to as the pegged, free-floated, or hybrid.
Kuwaiti Dinar (KWD)
The number one in the list of the strongest currencies in the world is Kuwait dinar. 1 US Dollar is equivalent in value to 0.308 Kuwaiti dinars. And you can buy one US dollar with 3.08 Kuwait dinars.
No matter what type of article you are reading, you will find Kuwait’s currency at the top of the rest of the strongest currencies in the world.
Kuwaiti Dinar is highly stable, so many investors keep a portion of their portfolio in this currency for its stability.
The currency was introduced to the ward in 1960 when the country declared its independence from British dominance.
Later, in 1919, Kuwait was under the invasion of Iraq, and the nation’s currency was replaced by the Iraqi dinar. But after the liberation, a new version of Kuwait dinar was introduced.
2. Bahraini Dinar (BHD)
The next in a row is another country in the Persian Gulf called Bahrain. Bahraini Dinar is the second strongest currency in the forex. The country is wealthy due to the oil reserves in the Kingdom.
3. Omani Rial (OMR)
The currency was introduced in 1970 by the name of Saidi Rial. It was renamed as the Omani Rial in 1972. just like other countries in the region, Oman’s strengths come from the rich old reserves. On the other hand, the country is building infrastructure to modernize and diversify its income, which will result in more strength of a country which has a very high standard of living.
4. Jordanian Dinar – JOD
The Jordanian Dinar has been the national currency of Jordan since 1950. before the, the Palestinian Pound was the central currency of the country.
The country’s wealth comes from oil reserves. On the other hand, the government proposes strict rules on exchange rates. Due to the slowdown of economic activities in this country, we might see a drop in its currency in a few years to come.
5. Cayman Islands Dollar – KYD
The currency was introduced in 1972 after the separation of the Island from Jamaica. And because of the tax Haven statutes of the currency, it is one of the favourite currencies for central banks, hedge funds and insurance companies. The currency is very close to the value of GBP, but it is pegged to the US dollar. At the time of writing, 1 Cayman Islands Dollar equals 0.99 Pound sterling.
6. British Pound – GBP
The British Pound is one of the oldest currencies in the world and the favourite currency for UK-based investors. Since the UK’s economy ranks among the largest economies globally, the currency is widely used on the world stage.
7. Euro – EUR
The Euro is the national currency of 20 countries out of 2017 members of the European Union. As we have talked about before, the US dollar is the most prominent currency in central banks’ reserves, and the second largest reserve currency is the Euro. The Exchange regime for the Euro is free-floating, and the currency is not pegged to other currencies
8. Swiss Franc – CHF
The Swiss Franc is one of the most robust and stable currencies in the world. Switzerland, with 9 million population, is one of the few European countries that has kept its own currency instead of adopting the Euro. The country is famous for its low inflation rate. Switzerland is a safe haven for investors due to its overall stability, high level of financial reporting openness and low bank interest rates.
9. US Dollar – USD
Surprisingly, the US dollar is the 9th strongest currency in the world. It is the largest reserve currency of almost half of the world’s central banks.
The dollar is the dominant currency to exchange oil, which is responsible for the wells and strings of the top four currencies in this list. A monopoly has been maintained by the US dollar to trade oil and gold in dollars. That is why most countries have large amounts of dollars in reserves to participate in global affairs.
10. Bahamian dollar – BSD
The Bahamian dollar is tied to the US dollar, so the currency is always equal to 1 dollar. It was the first country to introduce the Sand dollar (the legal digital currency of the nation), which resulted in the acceleration of the adoption of digital payments.
11. Panamanian balboa – PAB
The Panamanian balboa is pegged to the US dollar and has a long history of independence. It was introduced in 1902 when the country was liberated from Colombia.
12. Qatari Riyal (QAR)
3.64 Qatari Riyal is equal to 1 dollar. The country is one of the highest in the world based on GDP. The country is active in the oil industry, and the GDP is large due to the export of petroleum and natural gas products.
14. Emirati Dirham (AED)
The United Arab Emirates is one of the strongest countries in Mena and hosts many
expatriates who live and work in Dubai. The export of fossil fuels and resources drives the country’s wealth.
15. Saudi Arabian Riyal (SAR)
For every 1 dollar, you will get 3.75 Saudi Arabian Riyals. This is the currency of Saudi Arabia, which is one of the most significant economies in the world. The currency is pegged to the US dollar at 3.7500 since 1986.
The weakest currencies
Let’s talk about the Argentinian puzzle, which lost 13% of its value against the US dollar in 2023 due to a black hole reserve and hyperinflation.
I know the weakest currency in the world is the Iran Rial; a dollar is exchanged for 50,000 Irani Rials.
It has continued to lose its strength due to economic sanctions because of its nuclear program. Zimbabwe abandoned its currency, the Zimbabwean Dollar, in 2009 due to hyperinflation in the country. The central bank even issued a one-hundred trillion dollar note that could barely buy a loaf of bread. The Colombian peso, Cambodian Riel, and Ghanaian Cedi are also among the worst currencies in the world.
In the end
To be a successful trader, you need to seize the moment and choose the best currency pairs. And that’s all together. We have talked about the strongest currencies in the world to help you choose the best currency pairs for your next trade.
Use a demo account and test your trading strategies using different currency pairs to find the right one that suits your trading style. In Aron Groups, we provide you with various financial tools, including forex, cryptocurrencies, commodities, crude oil and gold. To be a successful trader, you need to test your ideas before trading real money using a demo account. Create a demo account and use your favorite currency pairs using different strategies, and as a result, you will learn about Market Movers.