Close-up on the currencies of ‘The Next Eleven’

In last week’s article we looked at ‘the next eleven’, those countries who are predicted to be the global economic leaders of the future. These are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam. 

Each of these eleven countries has their own independent currency which we’ll take a brief look at in turn below.

Bangladeshi Taka (BDT)

The Taka was introduced to Bangladesh in 1972 following their independence from Pakistan. 

In recent years, it has depreciated in value against major western currencies. 

In 2014, 1 USD was equal to around 77 Taka, today it’s nearly 95 Taka. 

Like many other countries in the region, the economy of Bangladesh is currently suffering from the economic perils of having a large trade deficit. This has led to a decrease in the country’s foreign currency reserves and a dramatic depreciation in the currency’s value.

The Taka, despite technically being a free-floating currency, is subject to very strict Foreign Exchange controls by the Government. Money can only enter or leave the country under certain strict conditions.

Egyptian Pound (EGP)

Today’s Egyptian pound has been around in one form or another for nearly 200 years. For a long time it was pegged to the Pound Sterling and then to the US Dollar

In 2016, the currency was allowed to freely float on the international markets however it has since depreciated in value against major western currencies.

In 2012, 1 USD was equal to around 6 EGP, today it’s nearly 20 EGP.  

The country is suffering from widespread inflation and the country’s central bank has recently had to devalue the pound.

Despite free-floating, the Egyptian Pound is subject to many Foreign Exchange controls and is widely viewed as a restricted currency.

Indonesian Rupiah (IDR)

The Rupiah was introduced in the 1940’s to replace the Dutch colonial currency. Since then it has experienced various ups and downs. It notably took hits in the late 90’s, late 2000’s and most recently during the COVID pandemic.

In the last survey by the Bank for International Settlements, the Rupiah was the 25th most traded currency and accounted for on average 0.4% of the daily volume of FX transactions.

In recent years, the Rupiah has depreciated in value against major western currencies. In 2012, 1 USD was equal to around Rp10,000, today it’s nearly Rp15,000. 

Along with Iran and Vietnam from this list, it’s one of the world’s least valued currencies with average rent for a flat being over Rp8,000,000 a month.

Iranian Rial (IRR)

The Iranian Rial is an old currency with its origins in the 18th century. The current currency dates back to well before the infamous 1979 revolution.

The Iranian Rial is one of the world’s least valued currencies. One months rent on a small city centre flat is around ﷼ 100,000,000 a month. This is in large part due to dire economic conditions in the country caused by international sanctions. Inflation is at well over 50%.

The Iranian Rial is subject to huge foreign exchange controls and due to sanctions is not allowed to be traded on the international currency markets (even if the country wanted to).

Plans have been made in recent years to replace the Rial with a new currency, the ‘Toman.’ It’s expected that this new currency will be phased in over the next few years.

Mexican Peso (MXP)

The Mexican Peso is also sometimes referred to as the “Nuevo Peso” or “New Peso.”  It was first introduced in 1993, replacing the old Mexican Peso at a rate of 1,000 to 1. 

The Mexican peso is relatively stable compared to its southern neighbours. This stability is largely due to Mexico’s strong economic fundamentals. 

The Peso is a free-floating and fully convertible currency. 

In the last survey by the Bank for International Settlements, the Peso was the 15th most traded currency and accounted for on average 1.7% of the daily volume of FX transactions.

In the last 10 years the Peso has fluctuated between being worth MX$13 and MX$20 for every 1 USD.

Nigerian Naira (NGN)

The Naira is arguably the continent of Africa’s second most important currency after the South African Rand. In the late 2000s the country planned a comprehensive re-denomination of its currency but this was cancelled by the then President.

The Naira doesn’t float freely on the international currency markets, the Nigerian Central Bank sets the exchange rate. The currency is subject to huge Foreign Exchange controls and heavy regulations. Making payments to and from Nigeria can become very complex. Owing to this, there is a large black market in foreign exchange in the country.

In recent years, the Naira has dramatically depreciated in value against major western currencies. In 2012, 1 USD was equal to around 150 Naira, today it’s over 400 Naira. 

Since the COVID pandemic began, the currency has been devalued three times, due to the problems that low oil prices have had on the domestic economy. 

The Naira is one of the first currencies to have its own CBDC (Central Bank Digital Currency), the e-Naira, which was launched in the autumn of 2021. You can read more about CBDC’s in a previous article here.

Pakistani Rupee (PKR)

Like its neighbour India, the Pakistani rupee is derived from the old British colonial rupee and has been in place since the country gained independence in 1948.

The rupee was once pegged to Sterling and then to USD but now floats freely.

Despite free-floating, the Pakistani Rupee is subject to strict Foreign Exchange controls and it is difficult to transfer money in or out of the country. 

In recent years, the Rupee has dramatically depreciated in value against major western currencies. In 2012, 1 USD was equal to around 96 Rupees, today it’s over 225 Rupees. 

Like its neighbours Sri Lanka and India, Pakistan suffers from a large trade deficit and therefore its currency is at much greater risk of peril than other countries on this list.

Philippine Peso (PHP)

The Peso has been in use in the Philippines in one form or another since the Spanish conquistadors landed on their shores back in the 1500s. 

In the early 1990s the country undertook a set of major structural financial reforms and established a new central bank: the Bangko Sentral ng Pilipinas which today is seen as one of the more innovative fiscal bodies in the region.

The Philippine Peso is free-floating on currency markets yet is subject to several controls. 

It’s very difficult to transfer this currency outside of the Philippines. 

Despite this, in the last survey by the Bank for International Settlements, PHP was the 30th most traded currency and accounted for on average 0.3% of the daily volume of FX transactions.

In the last 10 years the Peso has fluctuated between being worth 41PHP and 56PHP for every 1 USD.

South Korean Won (KRW)

The current Won was introduced in the 1950s, however the origins of the currency dates back much earlier. Its name is derived from the Japanese YEN and the Chinese YUAN

Despite being a liberal democracy and having a capitalist economy, the KRW is subject to several FX controls and is therefore only partially convertible on FX markets. It’s also very difficult to transfer this currency outside of South Korea. 

In the last survey by the Bank for International Settlements, the Won was the 12th most traded currency and accounted for on average 2.0% of the daily volume of FX transactions. 

In the last 10 years the Won has fluctuated between being worth ₩1,150 and ₩1,300 for every 1 USD.The won’s individual currency units have a low value, with the most common banknotes being ₩1,000 and ₩5,000. There are regular discussions in South Korea’s economic and political circles of introducing some form of re-denomination of the currency.

Turkish Lira (TRY)

The Turkish Lira is used as currency by both Turkey and the virtually unrecognised  Republic of Northern Cyprus. 

Inflation has been a problem in Turkey for many years and the Turkish Lira has been devalued several times throughout its history. In order to combat inflation, a new currency was introduced in 2005. The new currency wiped out six zeros from the old currency and re-established confidence in the Turkish Lira (for a while).

Inflation is on the rise again though and the currency has lost a significant amount of value. In 2012, 1 USD was worth around 1.8TRY, today it’s worth just under 18 TRY.

TRY is a free-floating and fully convertible currency. In the last survey by the Bank for International Settlements, the Turkish Lira was the 19th most traded currency and accounted for on average 1.1% of the daily volume of FX transactions.

Vietnamese Dong (VND)

The Vietnamese Dong is one of the world’s least valued currencies. One months rent on a small city centre flat is over 12,000,000₫ a month. This is in large part due to the fact the country has suffered regularly from large scale inflationary periods in recent history. 

In the last 20 years or so, the value of the Dong has remained stable fluctuating between 19,000₫- 23,000₫ to 1 USD.

The VND is considered to be a restricted currency with multiple foreign exchange controls. International transactions are tightly controlled and heavily regulated in Vietnam.

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