We all have read and heard so much about the strongest currencies in the world. The British Pound Sterling, US Dollar, Swiss Franc, and Euro among others are the most well-known currencies in the world. The countries that issue these currencies are very stable, and this follows for their currencies as well. Not many of us know of the cheapest currency in the world and the countries that issue it.
Lowest value currency to USD (as of 13th January 2019)
The Iranian Rial is the least valued currency in the world. It is the lowest currency to USD. For the simplification of calculations, Iranians regularly use the term ‘Toman’. 1 Toman equals 10 Rials.
Several reasons led to the decline of Iranian Rial; the war between Iran and Iraq, the threats faced by Israel, and the dangers of possible nuclear warfare. Due to this, measures such as restriction of ‘Iran’s access to the ‘world’s market were implemented, which ultimately caused significant losses to its economy. Iran was a major oil exporter, the country was also deprived of opportunities to export its oil. This again created a crucial deficit in ‘Iran’s national budget.
All of these events led to the dropping of the Iranian Rial as the lowest valued currency. The United States of America and the European Union, in 2016, lifted a few sanctions leading to an improvement of ‘Iran’s economic situation and stabilization of the Rial. However, in 2018, The United States of America imposed and sharpened their sanctions again.
The second cheapest currency in the world is the Vietnamese Dong. Vietnam is still on the way of complete progress from a centralized economy to a market economy. As a result, the Vietnamese Dong is a currency worth the least. Extremely devalued in terms of other world currencies, it has one of the lowest currency exchange rates across all countries except Iran. However, experts in currency matters claim that the government of Vietnam is marching ahead on the right path to growth and will soon catch up with its Asian neighbours. Soon, the Vietnamese Dong might not even be on the list of the cheapest currency in the world.
As a result of the low values of banknotes that were of an old-style, the presidential decree of 5th September 2016, issued 7 new banknotes Their denominations ranged from one thousand to hundred thousand Rupiahs. Though Indonesia is an economically stable and developed country in Southeast Asia, the Rupiah has a very low exchange rate. The regulatory authorities operating in the country have been implementing all measures to strengthen the national currency. However, until now, all efforts have only led to small, insignificant changes.
One of the most inflated currencies, the Guinean Franc is the official currency of Guinea. An African country with a high inflation rate, increasing poverty, and the prevalence of gangsters, Guinea has been suffering from a currency devaluation for a long time. The most astonishing aspects of this country are the natural treasures like gold, aluminium, and diamonds that are found in abundance here. With all such resources, the currency should be one of great value. Sadly, this is not the case.
As the only currency on the list of cheapest currency in the world that did not devalue is the Laotian Kip. As the only currency that was initially introduced at a very low rate, this currency has been suffering from a very low exchange rate for many years. Since 1952, the year of its issuance, the Laotian Kip has not been able to strengthen itself against the value of the US Dollar. Despite this fact, the value of this currency continues to improve gradually.
A very poor African country, Sierra Leone is continually prone to many setbacks and sufferings. With a very low level of economic and social development, the currency has been going through consistent devaluation for many years. As a country that has gone through many serious tests, the local currency is bound to become devalued. The recent war that took place in Sierra Leone further lowered the exchange rate of the Sierra Leonean Leone. The deadly Ebola virus that has been recurring for a long period also contributes to the weakening of the Sierra Leonean Leone.
The contemporary Uzbekistani Som began its circulation from 1st July 1994. With a ratio of 1 Som to 1000 Som-coupons, the issuance was done by the Decree of the President of Uzbekistan. Since 5th September 2017, the monetary policy of Uzbekistan has been liberal. As a result, the exchange rate of the Uzbekistani Som against the US Dollar was set at 1 USD = 8100 UZS. This was done with an estimated range of about 8000 – 8150 Uzbekistani Soms to 1 US Dollar.
The second poorest country in South America, Paraguay has been the victim of terrible economic setbacks, disastrous inflation, unruly corruption, low quality of education, and high levels of unemployment. Due to the low levels of economic development that prevail in this country, the value of the Paraguayan Guarani suffers greatly. The country is an exporter of soybeans and cotton. However, the revenue earned from these exports is barely sufficient to cover the high cost of its imports. As a result, the Paraguayan Guarani is one of the cheapest currency in the world.
The currency of the monarch state of Cambodia in Southeast Asia, the Cambodian Riel is a noteworthy one in the list of the cheapest currency in the world. Issued in 1995 to replace the Indochinese Piaster, this currency initially had a lower exchange rate. The Cambodian Riel was originally not popular among the Cambodians who preferred to use foreign currencies instead. Even today, they choose to use the US Dollar for many payments. Hence, the value of the Cambodian Riel continues to devalue by great extents.
The Ugandan Shilling was first issued in 1966 and replaced the East African Shilling which used to be the official means of payment in Uganda, Kenya, Tanganyika, and Zanzibar. On this day, the banknotes with the denominations of 1000, 2000, 5000, 10000, 20000, and 50000 are in circulation. It is important to note that the Ugandan Shilling is a relatively stable currency in comparison with the other currencies on the list of the cheapest currency in the world. For the past few years, the value of the Ugandan Shilling has not been lost more than 5 per cent.
It becomes increasingly difficult to arrive at a specific order in ranking the least valuable currency. This problem arises due to the rapidly changing economic conditions of the countries that issue it. In a majority of cases, economic setbacks are the prime reason for these to be listed as the cheapest currency in the world. These setbacks lead to a balance of payments deficit and growth of the inflation rate. Economic setbacks can occur due to decreasing GDP, war actions, falling prices of major export goods, a decrease in purchasing power, tightening of credit conditions, and political instability. The only way to control such devaluations is by the formulation of an efficiently organized monetary policy. An examination of the decisions of fiscal controls can also aid in bettering the value of the cheapest currency in the world.