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Have you ever wondered which country has the strongest currency? Which currency is considered the most expensive?
When you think about it there are over 180 different currencies around the world and they all hold different values. Today we will discuss some of the strongest currencies in the world and how they got there.
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In today’s world, according to the International Monetary Fund (IMF), more than 61% of all foreign bank reserves are denominated in US dollars. That is a lot of US dollars! And an even more surprising number is approximately 40% of the world’s debt is denominated in dollars.
Why are all these countries working in US dollars? Well, the reserve status is really dependent on the power of the U.S. economy and the superiority of the US financial markets. In other words, the world has more or less agreed that US Treasury securities remain the safest store of money, and that’s a big deal. The trust and confidence that the world has in the ability of the United States to pay its debts have kept the dollar as the kings of all kings for facilitating world commerce.
To understand the strongest currencies he world is by learning who the contenders are.
Now that we have established why the US dollar is widely used across the world and why people have a lot of trust in it, we will use the US dollar as a benchmark to rank the other big players. Now let’s cover the strongest currencies in the world.
Using the abbreviation CAD, the Canadian dollar is one of the most stable currencies in the world. What makes CAD so strong? If you take a look at Canada’s political and economical structure you will find it to be one of the most secure in the world.
CAD also is a very popular pair in the forex (FX) world. It accounts for around 5% of daily trades in the global foreign exchange market. If you were to exchange 1 USD into CAD you will get roughly 1.26 USD.
Here come the Swiss. With a long history of having a very sophisticated banking system, it comes as no surprise that the Swiss Franc ranks among the strongest currencies in the world. Using the abbreviation CHF, the Swiss Franc is not only the national currency of Switzerland but also Liechtenstein.
Why is it so strong? Well, for starters, if you exchange 1 USD into CHF you actually get 0.91 CHF. Making CHF stronger or more expensive than USD. Other than that, CHF also ranks as the 7th most traded currency in the world as it is considered a safe bet when trading or storing currency. CHF became very popular because of its strict monetary policies and low debt levels.
If we are being honest, a lot of our readers will not have heard of Gibraltar before. Maybe you have heard about the country once or twice before. But did you know it has such a strong currency?
The Gibraltar pound, also known as GIB, is exchangeable with the British pound sterling at face value. Meaning 1 USD gets you 0.72 GIB. So there you have it, a country with a population of 33,000 people ranks in the top 10 world’s strongest currency.
Who is Bahrain and why do they have a strong currency? Bahrain is a small country in the Middle East who has a lot of OIL. When you have a lot of oil and a small population, you tend to have a strong economy and currency. The simple math would be; a lot of money coming in from selling oil and not so much money going out to maintain a small number of people.
The Bahraini dinar is only used in Bahrain and is pegged against the US dollar. 1 USD will only get you 0.38 Bahraini dinars.
So who has the strongest currency in the world? The answer is Kuwait, another OIL rich small population country in the Middle East. Using the abbreviation KWD, the Kuwaiti dinar was introduced in 1960 and was initially equivalent to one pound sterling. Fast forward 60 years and Kuwait is a large global exporter of oil and generates mountains of money from doing so.
You will receive a mere 0.30 Kuwaiti dinar after exchanging 1 US dollar, making the Kuwaiti dinar the world’s most expensive currency, or in other words ‘the world’s strongest currency’.
When covering the strongest currencies in the world, it appears Kuwait takes first.
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