The value of the currency fluctuates all the time. If a currency is strong for five years, there is no guarantee that it will be the same in the sixth year. External variables such as inflation, interest rates, government policies, economic recession, and so on cause a currency to weaken. However, there are a few currencies that consistently rank among the world’s weakest. In this article, we will look at the weakest currencies in the world and learn why they are weak, as well as their present worth.
1. Iranian Rial (IRR)
In 2023, the Iranian rial slid to 500,000 rials per U.S. dollar. The inflation rate was up by 39.4%. Recently, the Iranian Rial slid down due to the death of Mahsa Amini. Her death sparked international outrage that led to 29% inflation in 2022. The current value of IRR is 42,325 for 1 dollar.
It is believed that the downfall of one of the weakest currencies in the world started in 1979, during the Islamic Revolution. Initially, the value of the rial was 70 rials to 1 US dollar. By 1982, inflation had risen by 90% after the new government came into existence.
The third main reason is the economic sanctions on Iran put in place by the USA. Since the Iran-Iraq war, there has been constant political tension between Iran and the USA. The United States has imposed a number of economic sanctions on Iran in recent years, which have made it difficult for the country to trade with the rest of the world.
Political instability is also one of the main reasons for IRR’s downfall. Foreign investors are afraid to invest in the country because the government is not stable. Due to inflation and the black market in foreign currency, nobody wants to risk their business.
2. Vietnamese Dong (VND)
As of 2023, the value of VND is 24,002 for 1 dollar. The annual inflation rate in Vietnam eased to 2% in June 2023 from 2.43% in May. Last year, the inflation rate of the dong was 3.16%.
As of 1986, after the Northern and Southern Dong were reunited, the country saw an inflation rate of 774%. This happened because the government attempted to create a single currency after the war. This was the first downfall the VND saw.
The Vietnamese government has placed strong restrictions on foreign investments in certain sectors. e.g., real estate and telecommunications. This has made it difficult for foreign investors to invest in Vietnam, which has caused a significant downfall in the value of the dong.
Vietnam’s export sector has slowed down in recent years due to a number of factors, including the US-China trade war and the COVID-19 pandemic. This has reduced the amount of foreign currency that Vietnam receives from exports. The rising interest rates of the US dollar are also one of the reasons for the weakening of the VND.
3. Venezuelan Bolivar (VEF)
Currently, 1 USD = 31.470412 VEF as of 2023. The inflation percentage of the Venezuelan bolivar in 2023 is estimated to be 405%. This means that the prices of goods and services in Venezuela are expected to increase by 405% in 2023 compared to 2022.
Since 1879, the official currency of Venezuela has been the bolivar. Surprisingly, the currency was not one of the weakest currencies in the world. The government’s decision to adopt a floating exchange in 1964 led to the downfall of the bolivar. By 1983, the situation was manageable. In 2008, Bolivar was replaced to control inflation, but it was of no use.
Venezuela has been experiencing hyperinflation since 2012. In 2018, inflation was 65,374%. The United States and other countries have imposed economic sanctions on Venezuela in recent years, which have made it difficult for the country to trade with the rest of the world. This has led to a shortage of foreign currency in Venezuela.
Venezuela is a politically unstable country, which has made investors wary of investing in the country. This has also contributed to the weakness of the bolivar. The country’s reliance on oil imports and the COVID-19 pandemic are also two main reasons that have decreased the value of the currency.
4. Indonesian Rupiah (IDR)
The Indonesian Rupiah is also on the list of the weakest currencies in the world. 15,301.30 is equal to 1 US dollar as of 2023. The inflation percentage of the Indonesian Rupiah (IDR) in 2023 is estimated to be 3.08%. The inflation percentage of the Indonesian Rupiah in 2022 was 4.2%.
The Indonesian Rupiah was introduced in 1946. Due to the 1997 Asia Financial Crisis, the Great Recession of 2007–2008, and the COVID-19 pandemic, the value of the IDR went down. The economy of the country is slightly stable now.
Indonesia is a major oil exporter. The decline in oil prices is a major reason for the currency’s weakening. The COVID-19 pandemic has had a negative impact on the Indonesian economy, leading to a decline in economic activity and a decrease in foreign investment.
Due to Indonesia’s high imports, the value of the rupiah is sliding downward. Secondly, the government has a lot of debt that needs to be cleared through bonds. There has been a significant capital outflow from Indonesia in recent years, as investors have become concerned about the country’s economic outlook.
5. Sierra Leonean Leone (SLL)
1 US dollar equals 19,750 SLL as of 2023. The inflation rate in Sierra Leone increased by 3.41% in June 2023. 27.21% was the inflation rate in 2022. Sierra Leonean Leone (SLL) is currently the fifth weakest currency in the world.
The currency was introduced in 1964, replacing the British West African Pound. Till the 1980s, the Leone was more valuable than the US dollar. But in 1980, it suffered a major depreciation that reduced its value.
Civil wars are also one of the reasons why the value of SLL goes down. Since Sierra Leone is a politically unstable country, foreign investors are afraid to risk business. Corruption is also a major reason for its downfall. There is a lot of bribery and extortion going on in the country.
The Sierra Leonean government has been mismanaging the economy for many years. This has led to high inflation. The country is also a major exporter of diamonds. Due to the declining price of diamonds in recent years, the country is not earning enough money from exports. The COVID-19 pandemic has also had a negative impact on the Sierra Leonean economy.
6. Laotian Kip (LAK)
The kip has been the currency of Laos since 1985. It was attached to the US dollar from 1958–72. As of 2023, 19,523 Laotian kips equal 1 US dollar. The inflation rate in Laos increased by 27.8% in July 2023. For 2022, an inflation rate of 23.0% was calculated.
The Laotian Kip is the sixth-weakest currency in the world. The Kip was replaced twice, in 1972 and 1979. Laos was also subjected to sanctions from the USA and other countries. This has made it difficult for the country to trade with other countries. Laos is a politically unstable country. This has made investors wary of investing in the country.
The weak economic growth of Laos has also led to the downfall of the KIP. Laos is also a major importer of commodities such as copper and timber. Due to the price reduction of these commodities, the currency went down.
The COVID-19 pandemic has had a negative impact on the Laotian economy, leading to a decline in economic activity and a decrease in foreign investment. The Laotian government is taking steps to try to strengthen the LAK, such as reducing economic sanctions and improving economic management. However, it is likely to take some time for the LAK to recover its value.
7. Uzbekistan Som (UZS)
As of 2023, the value of the Uzbekistani Som is 12,100 UZS for 1 dollar. The inflation rate in Uzbekistan increased by 8.94% in 2023. For 2022, an inflation rate of 11.4% was calculated. The Uzbekistan Som (UZS) holds the 7th rank as one of the weakest currencies in the world.
Initially, Uzbekistan continued to use the Russian Ruble for a few years after the Soviet Union collapsed. After 1992, it started using its own currency. Uzbekistan is subject to economic sanctions from the United States and other countries. This makes it difficult for the country to trade globally.
Secondly, Uzbekistan is a very politically unstable country. This lack of investment leads to a shortage of foreign currency in Uzbekistan, which puts downward pressure on the value of the UZS. The country’s slow economic growth has also triggered its currency’s downfall.
Uzbekistan is a major exporter of commodities such as cotton, gold, etc. Since the price of these commodities has decreased, the country faces a shortage of foreign currencies. A slump in the GDP, the restriction of currency conversion capacity, and the closure of borders for some countries, as well as the pandemic, have also led to the downfall of the SOM.
8. Paraguayan Guarani (PYG)
7,276.50 PYG amounts to 1 US dollar in 2023. Last year, the country saw an inflation rate of 9.77%. Currently, the inflation rate is 3.50%. The Paraguay Guarani was established in 1943 as an official currency.
In 2011, plans to revive the currency were announced. The Nuevo Guarani was to have a rate of 1000:1. But the project was suspended. High inflation is one of the major reasons why the country is experiencing inflation.
Paraguay’s economy has been stagnant in recent years. The GDP growth rate has averaged just 2.5% per year since 2015. Paraguay has been a politically unstable country in recent years. There have been several changes in government, and there is a lot of corruption. This has led to fewer foreign investments in the country.
Paraguay is a major exporter of soybeans. The price of soybeans has been declining in recent years, which has reduced the amount of foreign currency that Paraguay receives from soybean exports. The Paraguayan government is taking steps to try to strengthen the PYG, such as reducing inflation and improving economic growth.
9. Cambodian Riel (KHR)
The value of the Cambodian Riel compared to the dollar is 4,145 KHR for 1 US dollar as of 2023. The currency saw an inflation rate of 5.33% in 2022, and in 2023, the inflation rate was 2.99%. The Cambodian Riel is the ninth weakest currency in the world.
High inflation is a major reason for the currency’s downfall. Inflation erodes the value of the currency, making it more difficult for people to afford basic necessities. The country has seen positive growth in reducing inflation as of 2023.
Cambodia’s economy has slowed down in recent years. The GDP growth rate has averaged just 7% per year since 2018. In 2020, the National Bank of Cambodia announced that they would phase out the circulation of 1, 2, and 5-dollar notes to reduce costs as well as increase the need for riel as people trade in dollars in urban areas and use riel in rural areas.
The Cambodian Riel, which ranks 9th, is also one of the weakest currencies in the world. High inflation is a major reason for the currency’s downfall. Inflation erodes the value of the currency, making it more difficult for people to afford basic necessities. The country has seen positive growth in reducing inflation as of 2023.
In conclusion, the key reasons why these currencies are among the world’s weakest include economic sanctions imposed by many countries, political instability, corruption, limited economic growth, lower export prices, and excessive inflation. Hopefully, the governments of these countries will work to resolve this issue.
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