Discover the top 10 strongest currencies in the world
Having one of the strongest currencies in the world can make travelling more attainable, importing goods more affordable, and borrowing funds more accessible. The strength of a country’s currency may also indicate its economy’s health and political stability.
So, what are the strongest currencies in the world today? These are:
Kuwaiti Dinar (KWD)
Exchange rate as of October 26 2022: 1 KWD = 3.23 USD
In 1961, the KWD replaced the Gulf Rupee after Kuwait gained independence from Britain.
It is also the most valuable currency in the world because of Kuwait’s role as a major oil exporter in the international market.
Since Kuwaiti oil is in high demand, buyers are willing to exchange their own currencies for the Kuwaiti Dinar to secure their purchases.
Kuwait also exhibits a sense of security and a potential for high returns for investors because:
- It has a low unemployment rate
- It does not charge individual income tax
Bahraini Dinar (BHD)
Exchange rate as of October 26 2022: 1 BHD = 2.65 USD
The Bahraini Dinar was first issued in 1965 and comes from another oil-rich country. This currency is pegged to the US Dollar, meaning that the strength of the Bahraini Dinar may fluctuate in line with the currency of the USA.
Apart from oil, Bahrain is a major exporter of aluminium, iron ore, and asphalt. It also has a strong banking and finance industry.
Omani Rial (OMR)
Exchange rate as of October 26 2022: 1 OMR = 2.60 USD
The Omani Rial comes from another country with a strong oil industry. To keep its currency pegged to the US Dollar, Oman follows a tight monetary policy that calls for controlled spending. This keeps economic growth steady and slows down inflation (the rise of prices).
How does Oman keep inflation at bay? They do so by:
- Increasing interest rates to control borrowing from banks
- Selling assets from the central bank
- Controlling money supply (how much money is circulating in the country)
Jordanian Dinar (JOD)
Exchange rate as of October 26 2022: 1 JOD = 1.41 USD
Jordan has one of the strongest currencies in the world because of its economy.
Unlike the other currencies listed earlier, the Jordanian Dinar is not shaped by oil; instead, it is influenced by the following Jordanian industries:
- Public utilities
- Overseas remittances
Jordan pegs their Dinar to the US dollar like Kuwait, Bahrain, and Oman. Thus, whatever issues may arise in the American economy may also affect the value of the Jordanian Dinar.
Cayman Islands Dollar (KYD)
Exchange rate as of October 26 2022: 1 KYD = 1.20 USD
The Cayman Islands is a British Overseas Territory made up of three islands in the Caribbean Sea. The territory’s Dollar is one of the world’s strongest currencies because of an economy bolstered by their “twin pillars”: the financial industry and tourism.
Financially, the Cayman Islands are known to be a tax haven.
“A tax haven is a country that imposes low or no tax rates on foreign taxpayers,” said Logan Allec for The Balance. “Tax havens also often limit the information about these taxpayers that they are willing to share with other countries.”
With no individual or corporate income tax and a very private financial industry, the Cayman Islands attracts multiple investors who wish to open businesses and keep their profits in the islands.
To make money without income tax, Investopedia notes that the Cayman Islands earns from:
- Work permit fees
- Financial transactions
- Import duties
British Pound Sterling (GBP)
Exchange rate as of October 26 2022: 1 GBP = 1.16 USD
The British pound is the official currency of the United Kingdom and is used throughout the UK and 9 of its associated territories.
It’s worth more than the US Dollar and is heavily traded in the foreign exchange market. Other countries also peg their currencies to the British pound.
Because it’s one of the strongest currencies in the world, the British pound is also part of the International Monetary Fund’s (IMF) Special Drawing Rights or SDR.
According to the IMF, “The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.”
This means other IMF countries save up on British pounds for future transactions.
To make it to the SDR, a countries currency must pass the following criteria:
- Export Criterion – An IMF member country issues the currency, and this country is one of the top five exporters in the world.
- Freely Usable Criterion – Many traders use the currency to pay for international transactions. The IMF also says this currency is “widely traded in the principal exchange markets.”
Exchange rate as of October 26 2022: 1 EUR = 1.01 USD
Why is this so? Some of the reasons why the Euro’s value dropped below the US Dollar are:
- Energy – The conflict between Ukraine and Russia has affected the EU’s natural gas supply, which is largely dependent on Russia. This has affected energy prices and businesses in the area.
- Economy – As the economy in the EU slows, investors are keeping their eyes out for a recession.
- Interest rates – The US Federal Reserve has also raised interest rates, attracting investors who want to make more money from their funds.
The strength of a currency fluctuates on a daily basis, and as of October 26 2022, the Euro has crept ever so slightly above the value of the US Dollar once again.
Swiss Franc (CHF)
Exchange rate as of October 26 2022: 1 CHF = 1.01 USD
Another European currency is the Swiss Franc. It is one of the world’s strongest currencies and is also considered a safe haven.
According to HSBC Singapore, safe haven currencies are “expected to outperform during bouts of risk aversion.” This means that even in times of economic uncertainty, people trust that this currency will perform well because it has a consistent record of doing so. The country that issues this safe haven currency is also known to be economically and politically stable.
Apart from issuing safe haven currency, Switzerland is also a tax haven that draws in investors.
US Dollar (USD)
The US Dollar is the currency of choice in international trade and has been the world’s reserve currency since World War 2. Like the Swiss Franc, it is also a safe haven.
As a major reserve currency, US Dollars can be found in other country’s banks and are saved for times when:
- A government needs to help its people out of hard times
- A country needs to pay for imports
- A country’s central bank needs to raise or lower its currency’s value
Because the US Dollar is a major reserve currency, it also allows the US to:
- Easily borrow money from other countries
- Impose heavy sanctions that may affect trade between countries
Canadian Dollar (CAD)
Exchange rate as of October 26 2022: 1 CAD = 0.74 USD
The Canadian Dollar is known as one of the strongest currencies in the world. Other countries keep Canadian Dollars in their central banks as reserves, so they can engage in trade or use it if the need arises.
In the past, the Canadian Dollar was pegged to the US Dollar; today, it is free floating in the foreign exchange market, and its value is influenced by the cost of raw materials and natural resources in the international market.
What influences the Canadian Dollar’s value? Some factors are:
- Canada’s main industries – Canada’s main exports are oil, minerals, wood, and grains; thus, any fluctuations in the cost of doing business in these industries may affect the currency
- Canada’s strong ties with the US – Canada and the US have a long history of trade, and anything that affects the US economy may also affect the Canadian economy and the value of its currency
Send money to the Philippines
Wherever you are in the world, the strength of your country’s currency will affect how much money you can send to your family and friends in the Philippines.
To get your money’s worth, ensure you use a secure money transfer app that offers high exchange rates and very low fees, like Kabayan Remit for example.
Also, take a read of our previous article to learn how you can manage your funds correctly and reap the rewards of your labour as an Overseas Filipino Worker.