The United States dollar may be the most traded currency, but it’s not the most expensive one. But then, what determines how much every national currency cost? In this article, we’re going to briefly explain what affects the strength of a currency and list a couple of currencies that remain the strongest globally over the years.
What determines currencies’ strength
Back in the day, all currencies were bound to gold, so there was little question which of them were more valuable. In 1971, however, the so-called gold standard was cancelled, and now the strongest currencies are determined by fluctuating exchange rates, which in turn rely on a couple of key factors. These factors include the strength of the respective economy (in terms of inflation, GDP, trade balance, and other crucial indicators), the behavior of its central bank (called monetary policy), and the reserves.
However, external factors related to global events are important as well. For example, the COVID-19 pandemic has shown that a currency may also depend on the vaccination rate in the respective country. And then the Ukraine crisis has shifted the balance once again. By the way, the most expensive currencies don’t have to be especially popular. Take the Arab countries: their money is not very popular around the world, but these currencies are so valuable they actually occupy the majority of our list.
Alright, let’s get to the top 5 strongest currencies.
5. Pound sterling (GBP)
The Great British pound is the oldest currency still in use: it dates back to early medieval times, and some researches say it may be more than 1300 years old. Today, GBP is still one of the strongest and most traded currencies worldwide.
4. Jordanian Dinar (JOD)
Jordanian dinars are notably more expensive than US dollars: one JOD equals about 1.4 USD. However, Jordan doesn’t have too rich oil reserves, and its economy isn’t very big. JOD is simply pegged to USD to be more stable.
3. Omani Rial (OMR)
And here come the oil-rich Arab countries. The value of OMR relies on Oman’s oil exports, and this currency is now worth about 2.60 USD.
2. Bahraini Dinar (BHD)
Bahrain is also one of the most oil-rich countries in the world. One BHD equals about 2.65 USD.
1. Kuwaiti Dinar (KWD)
Finally, the world’s strongest currency: Kuwaiti dinar. Its value relies on the vast oil reserves this country has, and that’s why one KWD is worth more than 3.20 USD.
