World’s Strongest Currencies

Currency Collection

Many would assume that the world’s strongest currencies would start with the U.S. Dollar (USD) or British Pound Sterling (GBP), but since strength in this context refers to value, several currencies rank higher than both. What might come as a surprise is that the top four currencies are all from the Middle East, including the Jordanian Dinar in fourth place.

Kuwaiti Dinar (KWD)

1KWD = 3.30USD

The world’s strongest currency was previously pegged to the US Dollar (USD) but since 2007, the Kuwait Dinar it has been pegged to an undisclosed group of currencies managed by the Kuwaiti Currency Board.

The KWD is not widely available for trading and the stability of the currency, as well as the trading fees and commissions make it a low-yield investment.

Kuwait gets more than 80 percent of its global revenue from the oil industry, mostly with the US, giving it large reserves of USD to back the KWD.

Photo Credit: Morocco World News

Bahraini Dinar (BHD)

1BHD = 2.65USD

Also a major exporter of crude oil, Bahrain pegged its currency to the USD at 2.6008 since 1986.

The BHD’s annual average remained more or less stable at its current exchange rate for the past 10 years. Even though low oil prices has had a significant effect on Bahrain’s economy, the inflation rate was limited and relatively stable.

Photo Credit: Investopedia

Omani Rial (OMR)

1OMR = 2.60USD

Also pegged to the USD at a fixed exchange rate, the OMR maintained its value as a result of Oman’s historically strict monetary policy and tight financial control.

The significant difference in value between the Jordanian Dinar (JOD), which is the forth strongest currency, and the OMR is due to the Oman’s strong petroleum production.

Photo Credit: DNA India

Jordanian Dinar (JOD)

1JOD = 1.41USD

Unlike the top three currencies, Jordan has struggled with debts but the Kingdom pegged its currency to the USD more than 20 years ago. This enables to JOD to maintain relative stability despite the struggling national economy.

Pegging the JOD to the USD at a higher value was meant to offer a stable exchange, which would attract US investment into the Kingdom.

Photo Credit: andersphoto – Fotolia

Pound Sterling (GBP)

1GBP = 1.32USD

Over the past few decades, the Bank of England (BOE) kept pace with the latest developments across the globe and ensured the GBP remained more valuable than the USD.

The Pound specifically is valued higher than the U.S. Dollar because of Britain’s low inflation. Traditionally worth more than the USD, the GBP declined in the 20th century and then reversed the decline during the 80s regaining its advantage over the USD.

At one point the GBP was worth approximately USD5, but it has depreciated as Britain’s grip on the global economy loosened.

Photo Credit: Forex Crunch

Source: Forex, Investopedia and AlJazeera

Main Photo Credit: Reuters

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