Ever wondered about what the strongest currencies are? In this post we give you a rundown of the world’s five highest-valued currencies today, along with some reasons for how they got that way.
5. British Pound Sterling
Born around 775 AD, the pound today is over 1,200 years old, making it the oldest currency in the world. The term sterling referred to the silver pennies that marked the currency of the day: 240 pennies equaling one pound in weight. Up until 1717, when gold was adopted in its stead, silver was the commodity against which the pound was valued, and much like the empire in which it served, sterling reigned supreme. Only after two world wars and the economic slump of the 1930s, did it enter into decline, eventually being surpassed by the U.S. dollar as the international reserve currency of choice. In 1976, sterling fell below the value of two American dollars for the first time, and while it has seen its ups and downs since then, this is the approximate rate that most of us have come to know. Indeed, in spite of its fall from the top and long years of turmoil, the pound today remains among the strongest currencies in the world, sitting in fifth place on our list.
4. Jordanian Dinar
The history of the dinar, especially in contrast with the pound, is rather short. Jordan only became an independent kingdom in 1946, and it would be another few years before a national currency became instituted and introduced, in 1949 and 1950 respectively. Still, notwithstanding its late conception, the Jordanian dinar has done quite well during its short existence. In 1995 Jordan pegged its currency to the SDR; a reserve asset issued by the IMF which, for most of the past 20 years, has been virtually akin to the USD. Since then, the dinar has remained stable. While this monetary policy has not been without its disadvantages, it has been effective in encouraging foreign investment and reinforcing public confidence; and it is the primary reason for why the Jordanian dinar ranks so strongly today, sitting in fourth place on our list.
3. Omani Rial
The Omani rial has existed for an even shorter period than the Jordanian dinar. Although coins and currencies had circulated in the Gulf region for quite some time, it was not until 1970, when the modern-day Sultanate of Oman was established under Qaboos bin Said al-Said, that the rial was instituted in earnest. Even then, it existed until 1973 as the rial Saidi before it assumed its contemporary title of rial Omani. Oman has proven to be a bastion of stability and peace and has avoided the chaos that has engulfed some of its neighbours. Possessing modest oil reserves, Oman has also developed a healthy tourism industry. These, and a trade in fish and dates, have provided it with a more diverse economy than some other Gulf states. Still, it is likely the fact that the rial has been pegged to the U.S. dollar from its inception in 1973 (although the rate was devalued slightly in 1986) that has enabled it to remain so strong and stable. Today it sits at number three on our list.
2. Bahraini Dinar
The Bahraini dinar was introduced in 1965, while Bahrain was still a protectorate of Britain. Following the trend of the majority on this list, Bahrain has also pegged its currency to the IMF’s SDR (Special Drawing Rights; refer to the Jordanian dinar*), doing so in December of 1980. Despite strong oil exports and some attempts to diversify its economy, like many desert states, Bahrain by necessity is a net importer, having need to bring in even essential commodities like water. Maintaining a strong currency is crucial to sustaining purchasing power, and Bahrain has been successful in this, as evidenced by its ranking at number two on our list.
1. Kuwaiti Dinar
At number 1 on our list, the Kuwaiti dinar reigns as the strongest currency in the world. The dinar was first introduced in 1961, the same year Kuwait gained independence from Britain. During the Iraqi invasion in 1990, Kuwait’s currency was replaced by the Iraqi dinar, and large quantities of coins and banknotes were stolen by the invaders. After liberation in 1991, the Kuwaiti dinar was restored and a new series of bank notes was issued, thereby demonetizing the old series of notes, along with what had been stolen. In March 1975, the dinar was pegged to a weighted currency basket (the currencies contained in said basket remain undisclosed). This was the case until January 2003, when the dinar became pegged to the U.S. dollar. However, from June 2007 the dinar was re-pegged to a currency basket and remains so to this day.
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