Last updated on: 7 January 2023
Imagine exchanging your ₹500 note and getting 2,50,000 worth of the local currency of some other country. Isn’t it a novel feeling? Your new ₹2000 note will make you a millionaire. The question is, “Where would you be a millionaire by exchanging a single banknote?” Which are these least valuable currencies in the world compared to the India Rupee?
BookMyForex has compared the list of World’s 10 least valuable currencies in 2022.
The Rates/Data are from Xe.com and BookMyForex Live Rate card.
Looking for the weakest currency in the world? Here’s a list of the top 10 cheapest currencies in the world updated till now.
#10 – Iraqi Dinar (IQD)
Currency Code: IQD
1 INR = 17.75 IQD
The Iraqi Dinar is Iraq’s currency. It is issued by the Iraqi Central Bank and is subdivided into 1,000 fils, but since 1990, inflation has made the fils redundant. There’s been a lot of political instability in the country in the past decade. As of today, 1 INR equals to 18.25 IQD whereas 1 USD is equal to 1459.86 IQD.
#9 – Ugandan Shilling(USH)
Currency code – USH
1 INR = 45.13 USH
The Uganda Shilling was introduced in 1966 after it replaced the East African Shilling. The currency falls among the least valuable currencies of the world today. A country of East Africa, Uganda has witnessed a severe setback under the governance of Idi Amin. The president developed policies that negatively contributed to the country’s economy, including immigration policies. The impact of the economic weakening that occurred under the president is still creating obstacles in the country’s development. However, the last few years has seen improvement in the currency’s value, with no more than 5 percent of devaluation.
#8 –Paraguayan Guarani (PYG)
Currency code – PYG
1 INR = 89.10 PYG
PYG is the national currency unit of Paraguay. A disastrous economic downturn resulted in high inflation, corruption, high unemployment rate, and an increase in poverty. All these factors have had a negative influence on the currency.
The Guaraní is currently the least valuable currency unit in the Americas.
#7 – Guinean Franc (GNF)
Currency code – GNF
1 INR = 106.66 GNF
It is the official currency of Guinea. There’s a lot of corruption and political instability in the country which has led to their currency becoming weak. The country is getting its value depreciated year by year.
#6 – Uzbekistani Som (UZS)
Currency code – UZS
1 INR = 137.65 UZS
It takes around 10,911 UZS to buy 1 USD. This country has one of the weakest economies and, consequently, a weak currency. The Uzbekistan government has employed several means to improve the country’s economy. But none has proved fruitful till date. The latest reformatory measure has been taken by the Government in the beginning of this year. The changes that these measures will bring to the currency’s value is yet to be explored. Like many other countries, the pandemic has taken a toll on the country’s economy, though data suggests that the country has resumed its internal activities in the third quarter of this year. The Industrial output, however, has deteriorated paving way for more uncertainties regarding the fate of the currency.
#5 – Indonesian Rupiah (IDR)
Currency code – IDR
1 INR = 189.70 IDR
This is another low performing currency of the world. The currency has shown no improvement in the last 7 years. A number of factors are attributed to its devaluation, which includes its decreasing foreign-exchange reserves due to the central bank’s failure in protecting the currency. Indonesia heavily depends on its export market for commodities. And with the fall of the commodity prices, the value of the currency has seen a further downfall. 35 to 40 percent of the Rupiah sovereign bonds are held by the overseas investors, making the capital flow vulnerable. To strengthen the country’s economy, the government has undertaken several measures such as reducing taxes, promoting tourism, and loosening the rules applied to foreign workers.
#4 – Lao or Laotian Kip (LAK)
Currency Code– LAK
1 INR = 208.82 LAK
Interestingly, the Lao is not really a currency that has devalued but is rather a currency that has been following a low rate since its introduction in 1952. It takes around 15079.11 Laotian Kip or LSK to purchase 1 USD. On the brighter side, the value of the currency has improved over the years. A $7 billion railway is planned to connect Beijing to Laos, which is anticipated to draw a pool of investors to this small country. The country’s currency, thus, appears to be a promising one, though it is currently listed among the least valuable currencies.
#3 – Vietnamese Dong (VND)
Currency code – VND
1 INR= 285.27 VND
It takes around 23363 VND to buy 1 USD, making the currency one of the bottom three. The country has long followed a centralised economy. Although the country has embarked on a journey of forming a market economy, it still has a long way to go. The Vietnamese Dong is currently devalued at a high level. But analysts believe that the value of the currency would improve over time due to the improving economy of the country.
#2 – Sierra Leonean Leone (SLL)
Currency code – SLL
1 INR = 229.84 SLL
This is an African country that is heavily affected by poverty. The exchange rate of 1 USD to Sierra Leonean Leone or SLL is 13892.50. The country has a history of corruption and scandals. It has also witnessed a heinous civil war along with several other conflicts in the Western African countries. All these have led to the fall of the country’s economy and the currency’s value. The limitation of the country’s export market to diamonds does not bring much scope to the improvement of the economy. In addition to these, the Ebola virus is an infection that constantly affects the population, further depleting financial aids.
#1 – Iranian Rial (IRR)
Currency code – IRR
1 INR = 508.67 IRR
Iranian Rial is currently listed as the world’s cheapest currency. The downfall of the currency value can be explained by several factors. To begin with, the end of the Islamic Revolution in 1979 was followed by the withdrawal of foreign investors from the country. This led to the currency’s devaluation. The nuclear power programs of the country, along with the Iran-Iraq war, caused huge financial expenses. The government’s decision to restrict foreign currency in the nation lifted the black market to a significant level. The withdrawal of the nuclear agreement with Iran by the US government in 2018 severely affected Iran’s export market, eventually resulting in the currency’s current devaluation of 600 percent.
Factors that Affect Currency Exchange Rates
The foreign exchange rate is an important factor in determining a country’s economic health. It provides insight into the country’s economic prospects.
The value of a country’s currency is determined by the exchange rate. The rate does not stay the same. It’s always shifting. In reality, it varies on a regular basis depending on market conditions.
A few main economic factors that affect the forex exchange market are mentioned below to provide you with more detail.
A change in the interest rate may be a factor. It may have an effect on the value of the currency and the exchange rate. Many economic variables, such as interest rates and currency exchange rates, are intertwined. Lenders will foresee higher interest rates if the interest rate increases. The outcome is self-evident. It would draw in more foreign investment. Exchange rates will increase as more international capital enters the market.
Changes in market inflation can have an impact on currency exchange rates. If your country has a low rate of inflation, your currency would have a higher value. When inflation is low, the prices of services and products will rise slowly and steadily. When the rate of inflation is steadily lower, the value of the currency rises. The currency value would depreciate as the inflation rate rises. It will also have an effect on interest.
Government Debt or Public Debt
Government Debt is also known as public debt. You want to know why? The debt owed by the government is a public liability. The government has taken it. If your country is in debt, the chances of having more money are slim. It has the potential to cause inflation. When inflation is high, foreign investors would be hesitant to invest in the currency. As a consequence, the currency’s value would depreciate.
Political stability and Sound fiscal policy
The importance of political stability cannot be overstated. The forex market is influenced by a country’s economic results. When there is no stable government, economic performance will suffer. The currency would not be lucrative for investors. International investors will flock to a stable government. Not only will the investment boost foreign capital, but it will also raise the value of the domestic currency. International investors are more likely to trust a nation with a stable political system and sound financial policy.
Current Account of a Nation
The current account of a nation reflects the country’s financial situation. It displays the money generated on the forex market. It will contain all relevant information, such as the volume of transactions, debts, and any other economic data. When a country’s current account is in deficit, foreign investors are less likely to consider investing in that country’s currency.
Recession has an effect on a country’s economic growth. The foreign exchange market is no exception. In the event of a recession, interest rates will drop. Foreign capital would depreciate as a result of this. When interest rates are low and foreign capital is scarce, the currency’s value begins to fall. As a consequence, the exchange rate would be lower.