The world's lowest exchange rate: An overview of disappearing currencies and their devalued worth

Introduction: Why Some Currencies Devalue Significantly

The decline in a currency’s value is caused by multiple underlying factors embedded in each country’s economic structure, from soaring inflation to a lack of economic diversification, political instability, economic sanctions, and insufficient attraction for foreign investment. These factors combine over time, leading to prolonged devaluation.

Current Exchange Rate Comparison Table

In-Depth Analysis: Countries and Currencies in Crisis

###Lebanese Pound (LBP) - The Worst Economic Crisis

The Lebanese pound (has become a symbol of economic collapse. Once a financial hub of the Middle East, Lebanon’s currency is now valued at the lowest in history.

Historical and Economic Background:

• The Lebanese pound has been the official currency since 1939
• It was pegged to the US dollar for many years
• Since 2019, the currency has lost over 90% of its value in multiple foreign exchange markets
• Current exchange rate: 89,751.22 LBP per 1 USD

Crisis Conditions: Lebanon is experiencing its most severe economic recession in decades. Banks have ceased operations, foreign investment has nearly dried up, and humanitarian crises have led to food shortages. The government defaulted on public debt in 2020, eroding market confidence entirely.

)Iranian Rial ###IRR( - Impact of Sanctions and Tensions

The rial )or IRR( of Iran has been affected by long-standing economic sanctions and geopolitical tensions in the Middle East.

Factors Contributing to Currency Weakness:

• Ongoing geopolitical tensions
• Heavy reliance on oil exports
• US sanctions related to nuclear programs
• Inflation reaching triple digits
• Current exchange rate: 42,112.50 IRR per 1 USD

Iran’s financial system has been damaged by disconnection from global markets and lack of international credit support.

)Vietnamese Dong ###VND( - Exchange Rate Management for Economic Benefit

Vietnam’s dong demonstrates an interesting case where a weak currency isn’t always due to economic distress but can be a result of deliberate monetary policy.

Economic Context:

• Vietnam has experienced continuous economic growth over the past two decades
• The central bank manages the exchange rate tightly
• A weaker currency helps make exports more competitive
• Current exchange rate: 26,040 VND per 1 USD

This policy aims to enhance competitiveness in the global economy. As a major exporting country, Vietnam needs its goods to be competitively priced.

)Laotian Kip ###LAK( - Deterioration of Economic Development

Laos is one of the slowest developing countries in Southeast Asia.

Structural Issues:

• Heavy dependence on agriculture
• Very low levels of foreign investment
• Weak infrastructure
• Current exchange rate: 21,625.82 LAK per 1 USD

After the COVID-19 crisis, Laos faced additional pressure from inflation and ongoing economic downturns.

)Indonesian Rupiah ###IDR( - A Large Economy Sensitive to Commodities

Indonesia is one of Southeast Asia’s largest economies, but the rupiah remains low in value.

Economic Factors:

• Reliance on commodity exports as a main pillar
• Oil, mineral, and agricultural prices directly impact the currency’s value
• The central bank must intervene regularly
• Current exchange rate: 16,275 IDR per 1 USD

Regardless of market trends, dependence on commodities keeps the rupiah vulnerable.

)Uzbek Sum ###UZS( - Economic Isolation and Underdevelopment

Uzbekistan declared independence from the Soviet Union and has been attempting economic liberalization, but progress remains limited.

Liberalization Challenges:

• The financial system remains tightly controlled by the state
• Economy relies heavily on agriculture and resource exports
• Foreign investment faces many obstacles
• Current exchange rate: 12,798.70 UZS per 1 USD

Since adopting the Uzbek sum in 1994, the country has faced ongoing instability.

)Guinean Franc ###GNF( - Commodity Price Fluctuations and Instability

Guinea’s economy is closely tied to commodity markets, with its economic health fluctuating with mining prices.

Institutional Weaknesses:

• Low infrastructure development
• Political instability and corruption
• Weak education and public services
• Current exchange rate: 8,667.50 GNF per 1 USD

The Guinean franc was introduced to replace the French franc but has never achieved stability.

)Paraguayan Guarani ###PYG( - Dependence on Agriculture and High Debt

Paraguay has a tumultuous history of economic crises and currency depreciation.

Long-term Issues:

• Structural weaknesses in monetary policy
• Heavy reliance on soybean exports
• High public debt levels
• Current exchange rate: 7,996.67 PYG per 1 USD

Despite reform efforts, Paraguay remains trapped in economic hardship.

)Malagasy Ariary ###MGA( - Underdeveloped Economic Structure

Madagascar, an island in the Indian Ocean, faces development challenges due to its isolated geography.

Economic Particularities:

• Economy depends on tourism, agriculture, and resource exports
• Vulnerable to cyclones and weather events
• Current exchange rate: 4,467.50 MGA per 1 USD

The Ariary uses a non-decimal system, where 1 Ariary = 5 Iraimbilanja.

)Burundian Franc ###BIF( - The Poorest Country with Weakest Stability

Burundi is the poorest country in the world on average, and its currency reflects a state of economic despair.

Economic Conditions:

• Continually rising inflation
• Food insecurity and malnutrition
• Political unrest and conflicts
• Current exchange rate: 2,977.00 BIF per 1 USD

The Burundian franc was introduced in 1964 after independence but has never escaped crisis.

Key Economic Factors Affecting Currency Values

) 1. Inflation Rate Countries with high inflation often see their currencies depreciate due to reduced purchasing power.

2. Interest Rates

Higher interest rates attract foreign investment and increase currency demand.

3. Current Account Deficit

Persistent deficits mean a country is spending more than it earns, putting downward pressure on the currency.

4. Political Stability and Rights

Political instability causes investors to flee to safer assets.

5. Dependence on Commodity Exports

Commodity-dependent countries have currencies sensitive to price volatility.

Summary

The world’s cheapest currencies are not just numbers but reflections of profound economic challenges faced by each country. From inflation and current account deficits to political instability, these factors influence whether a currency appreciates or depreciates.

Understanding these factors helps investors and interested parties assess the economic health of nations more deeply and comprehend why some currencies are undervalued and the prospects for future recovery.