The Race to the Bottom: The Weakest Currencies in the World

In today’s global economy, currencies are one of the most critical factors in determining a country’s financial stability and overall economic health. While some currencies, like the US Dollar and the Euro, are widely recognized as strong and stable, others struggle to maintain their value on the international stage. 

In this article, we will take a closer look at the world’s weakest currencies, exploring the factors contributing to their instability and their impact on the countries that use them. 

Let’s learn more!

1. Iranian Rial 

The official currency of Iran, the Iranian Rial (IRR), has historically been one of the weakest currencies in the world due to several factors, including high inflation rates, economic sanctions imposed by the international community, and political instability within the country. 

Its economic downfall started in 1979,  in the wake of the Islamic Revolution, which led to many businesses leaving the country due to uncertainty. Since then, Iran has faced further turmoil with the Iran-Iraq war and more international sanctions. 

In recent years, the Iranian government has taken measures to stabilize the IRR, such as implementing new monetary policies, increasing interest rates, and tightening capital controls. However, the IRR still can’t pick up the pace with the major currencies of the world. As of March 2023, the exchange rate of the IRR to the US Dollar is around 42,275.00 IRR per 1 USD, making it the least-valued currency in the world.

2. Vietnamese Dong

The Vietnamese Dong is the official currency of Vietnam and has been in use since 1978. The dong is abbreviated as VND and is often represented with the symbol “₫”. The Dong is one of the least valued currencies in the world, with 1 US Dollar worth 23,665.00 VND as of March 2023.

In recent years, Vietnam underwent significant economic growth and development, driven by various factors, including market-oriented economic reforms, trade liberalization, and foreign investment. The country is transforming from a low-income, agricultural-based economy to a middle-income, manufacturing, and service-based economy.

According to currency experts, the Vietnamese government is on a path toward growth and is expected to catch up with its Asian neighbors in the near future.

3. Sierra Leonean Leone 

Located in West Africa, Sierra Leone is one of the poorest countries in the world and has one of the world’s weakest currencies. The country has faced significant economic challenges in recent decades, including a long civil war and ongoing struggles with poverty, inequality, and limited access to essential services and infrastructure. The outbreak of the COVID-19 pandemic has made matters worse for the country as its economy devalued even more in the last two years. 

The official currency of this country, Sierra Leonean Leone (SLL), underwent many changes throughout the years, including a significant redenomination in 1964 when the currency was changed from the British West African pound to the Leone.  As of March 2023, the exchange rate of the SLL to the US Dollar is 19,678.65 SLL per 1 USD. 

4. Indonesian Rupiah 

With a population of over 270 million, Indonesia is one of the world’s most populous countries, and its economy has grown rapidly in recent years. The Indonesian Rupiah  (IDR) has a long history, dating back to the 1940s when Indonesia gained independence from the Netherlands. Today, the most common denominations of the IDR include notes of 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000. 

During the Asian financial crisis of 1997-1998, the Rupiah’s value plummeted by more than 80%. The devastating harm to the Rupiah during this crisis undermined trust in the currency. Although a freely convertible currency, the rupiah is nevertheless considered risky to hold. As of March of 2023, the exchange rate of the IDR to the US Dollar is 15,338.25 per 1 USD.

5. Laotian Kip 

The Laotian kip (LAK) is the official currency of Laos, a country in Southeast Asia with a population of almost eight million. It was first introduced in 1952 to replace the French Indochinese piastre. 

The kip has historically been an unstable currency, with high inflation and devaluation periods. Despite experiencing a swift economic expansion, Laos continues to be one of the most impoverished nations in Southeast Asia, as it is a landlocked country with limited infrastructure and a primarily unskilled labor force.  As of 2023, the exchange rate for the LAK is 16,930.00 kip to 1 US Dollar. 

6. Uzbekistani Sum 

The country of Uzbekistan has faced significant economic challenges throughout the years. The country’s official currency, the Uzbekistani Sum (UZS), is subject to high inflation and is one of the weakest currencies in the world. It was first introduced in 1994, following the collapse of the Soviet Union and Uzbekistan’s transition to independence. 

Uzbekistan has struggled with corruption and a lack of transparency in its economy, which has hindered foreign investment and economic growth. As of 2021, the exchange rate for the UZS is 11,380.00 to 1 US Dollar. 

7. Guinean Franc

Guinea is one of the world’s largest bauxite producers, used to make aluminum. The country’s economy relies heavily on the mining sector, which accounts for a significant portion of its GDP and exports. However, Guinea has made efforts to diversify its economy in recent years, focusing on agriculture, fishery, and tourism.

Despite its significant potential, Guinea continues to be one of the world’s most impoverished countries, plagued by high poverty rates, gang problems, and hyperinflation. The official currency of this country, the Guinean Franc (GNF), is valued at 8,571.79 GNF to 1 US Dollar as of March 2023. 

8. Paraguayan Guarani 

Paraguay is renowned as a frequent exporter of organic sugar, stevia, soybeans, and cotton. However, this has not been enough to combat the country’s growing poverty and economic disruption. The official currency of this country, Paraguayan Guarani (PYG), is valued at 7,172.51 PYG per 1 US Dollar. It was first introduced in 1944, replacing the Paraguayan Peso. 

The Paraguayan Guarani is one of the few currencies globally with an indigenous language on its banknotes. The Guarani language, spoken by most Paraguayans, is prominently displayed on the front of all banknotes, alongside Spanish.

9. Cambodian Riel

The Cambodian riel (KHR) has historically been a weak currency, with a relatively low value compared to other currencies. Cambodia is a highly dollarized economy, with the US Dollar widely accepted in everyday transactions. Some estimates suggest that up to 90% of all transactions in Cambodia are conducted in US Dollars. This has made it difficult for the Riel to gain traction as a widely used currency, further contributing to its weakness.

Cambodia is a developing country with a low GDP per capita and significant economic challenges. This can put downward pressure on the Riel’s value, as investors may be less willing to hold onto Cambodian currency in uncertain economic times. As of March 2023,  the exchange rate of the KHR to the US Dollar is 4,057.00 KHR per 1 USD. 

10. Ugandan Shilling

The Ugandan Shilling has two currency symbols: “USh” and “UGX”. While “USh” was the original symbol used for the shilling, “UGX” is now more commonly used, particularly in financial markets.

Uganda is a predominantly agricultural country, and the value of the Ugandan Shilling is closely tied to the performance of the agricultural sector. Changes in the prices of crops, such as coffee and tea, can significantly impact the value of the shilling. As of March 2023,  the exchange rate of the UGX to the US Dollar is 3,705.00 per 1 USD. 

Explore the Fascinating World of World’s Currencies

From hyperinflation to political turmoil, there are various reasons why certain currencies struggle to hold their value. Understanding these factors is crucial for making informed decisions in today’s global financial landscape. 

Whether you’re an experienced investor and trader or a novice fascinated with the diversity and richness of the world’s monetary systems, we hope this article helped you learn more about the world’s weakest currencies!