Last week we looked at the world’s ten strongest countries and the reasons behind their high value. Following on, below we are looking at the reverse, which are the world’s least valuable currencies and why.
🇨🇴 Colombian Peso (COP)
£1 = 5,857
Throughout the last 50 years, the Colombian Peso has been subject to rampant inflation. Centavo subunit coins were removed from circulation in the 80s!
The country has suffered from historic problems of domestic rebellion, political instability and a vast criminal network, all of which undermine the country’s institutions and thus weaken the position of the currency.
In recent years the country has seen politicians attack the Central Bank (never a good thing for a currency’s value) and seen turbulence due to the fluctuation in oil prices, something which the country exports in abundance.
🇬🇳 Guinean Franc (GNF)
£1 = 10,229
Most people would struggle to point out the Republic of Guinea on a map. It is located on the west coast of Africa and borders confusingly Guinea-Bissau and isn’t too far from Equatorial Guinea.
Many currencies in this part of the world are weak, however the Guinean Franc is notable for its extremely low value and extreme inflation. Its sub-unit the Centime has in fact never been used!
Guinea has been beset by problems that have devastated the economy and thus the value of the currency. It has been ravaged time and again by disease including AIDS, Ebola and Covid, all of which have taken a vast economic toll. It also has vast levels of political instability, it is currently under a military dictatorship following a coup in September 2021. Combined, this has led to a lack of any form of trust in the currency’s potential both domestically and internationally.
🇮🇩 Indonesian Rupiah (IDR)
£1= 18,697
Indonesia is one of the world’s fastest growing economies. It is part of the G20 and other influential economic forums. It is becoming a regional power, hosting the G20 summit in Bali in November 2022.
This makes it all the more confusing when you see the value of its currency, the Rupiah.
The Rupiah has been subject to periods of hyperinflation and with the Central Bank often following on by printing more money to keep up pace. The currency also has many issues with counterfeiting which has further undermined confidence in the rupiah.
Post-Covid, the country has been experiencing vast economic problems which have further undermined the currency’s value, Indonesia recently saw its first economic contraction since the 90s!
🇮🇷 Iranian Rial (IRR)
£1= 50,527
Nobody will be surprised that Iran makes this list. The country has been subject to multiple sanctions since it overthrew the Shah in 1979!
The domestic economy has been struggling, especially in the last few years after the wrangling over the nuclear deal saw even more restrictions imposed.
Currently the inflation rate is at 50%+ which means presently, a loaf of bread in Tehran costs over 20,000 rials!
🇱🇦 Laotian Kip (LAK)
£1= 20,533
Many people would struggle to place Laos on a map. This is in large part due to its self-imposed isolation from the international community. The country is a one-party communist dictatorship that runs the country as if the Cold War never ended.
The country has low levels of development and is reliant on its neighbours for support. It has slowly started to open up the economy to the world but is well behind its neighbours in China and Vietnam.
The main reasons for its weak currency value have been historic low levels of foreign exchange reserves, inflation and a general lack of confidence both domestically and internationally in the Kip’s value.
🇲🇬 Malagasy Ariary (MGA)
£1= 5,144
The Ariary is the currency of Madagascar, a huge island off the coast of south eastern Africa. The country is incredibly poor with over 70% of the country living below the poverty line. Its economy has been chronically underdeveloped and its political and financial systems are very weak.
In recent years, the country has been ravaged by natural disasters & extreme weather events. These have been highly destructive and the government has been unable to support disaster recovery and repair. Trust in the country’s institutions has become non-existent and therefore inflation is rampant and confidence minimal. The country is trapped in a vicious cycle that climate change appears to only be worsening.
🇵🇾 Paraguayan Guarani (PYG)
£1= 8,546
Paraguay is a landlocked South American country which borders countries like Brazil and Argentina.
The Guarani has been ravaged by inflation over the years and like many countries on this list, Paraguay got rid of the currency’s subunit years ago.
The country has suffered from high levels of corruption, weak institutions and firm criminal networks that have all combined to undermine the value of the currency.
🇸🇱 Sierra Leonean Leone (SLE)
£1= 21,557
Most people know little about Sierra Leone, their only vague knowledge being of a civil war in the late 90s that the UK got involved in to stop violence against civilian populations.
The currency of Sierra Leone has been subject to multiple periods of hyperinflation and has been devalued several times. The regular outbreaks of civil conflict has weakened the country’s political and financial systems making handling monetary policy immensely difficult.
Simply put, the country doesn’t have strong enough institutions to effectively manage the currency and therefore it is incredibly weak.
🇺🇿 Uzbekistani Som (UZS)
£1= 13,306
Uzbekistan sits in the heart of Central Asia, bordered by fellow ex-Soviet countries like Kazakhstan and Turkmenistan. It also has Afghanistan as a southern neighbour.
The country has been pretty much closed off from the world since its independence in the early 90s. It is a highly centralised authoritarian dictatorship with little freedom. The Som only recently became fully convertible in recent years. The Uzbek domestic economy is based on exports of gold and energy which are notoriously volatile in pricing. This has created a toxic situation where the Som is seen by markets as having little strength.
🇻🇳 Vietnamese Dong (VND)
£1= 29,613
The Vietnamese dong has been towards the top of the world’s weakest currencies for many years now, at one point in the early 2000s topping the list. The causes are many.
To begin, the currency is highly centrally controlled and not properly open to markets. The government has regularly followed a cycle of printing more money and then devaluing. Since 2014 the currency has been devalued on four separate occasions.
The domestic economy has only (comparatively) recently opened up to international commerce, this means that the dong is not seen as a known or understood quantity. The dong is given a wide-berth and is not very trusted therefore negatively affecting its value.
