Top 10 Weakest Currencies In The World In 2023 – Forbes Advisor INDIA

Many people think of the strongest currencies in the world and the U.S. dollar is the most popular currency that pops into one’s mind. Well, it should too as it is one of the most exchanged currencies in the world. But to all’s surprise, the U.S. dollar isn’t the strongest currency; instead it is the Kuwaiti Dinar (KWD).

But, can you imagine a country where your INR 2,000 can make you a millionaire or INR 500 can be worth somewhere in lakh? Or about countries where vacationing won’t be a money matter.

Let’s get into the details of the cheapest currencies compared to Indian rupees in the world that can make you feel rich.

How are Overseas Currencies Priced?

Foreign or overseas currency is always traded in pairs. For instance, buying Indian rupees with Vietnamese dong or Indian rupees with Iraqi dinar. As a result, currencies are always priced relatively to another currency which is known as the exchange rate.

There are floating currencies, which means some values of the currencies vary depending on their demand and supply and some currencies are pegged which means that their value is stable at an agreed rate.

The exchange rate affects the pricing of goods and services in a foreign currency. For instance, if the Indonesian rupiah weakens against the rupee, a holiday in India would cost more in rupiah terms.

What Are The Top 10 Cheapest Currencies In The World As Of May 2023?

1. Iranian Rial (IRR) 1 INR = 516 IRR

The Iranian rial tops the table of the cheapest currency in the world. The fall in the value of the currency can be explained by various factors. To start with, the termination of the Islamic Revolution in 1979 was followed by foreign investors’ withdrawal from the country. The nuclear program and the Iran-Iraq war also played a huge part as it caused financial distress, and other political unrest in Iran.

2. Vietnamese Dong (VND) 1 INR = 284 VND

The country has long followed a centralized economy. Although the country embarked on a path of forming a market economy, it still has a long road to walk. The currency is highly devalued currently but the chances are high of the currency improving considering the improvement in the economy.

3. Sierra Leonean Leone (SLL) 1 INR = 278 SLL

Sierra Leonean Leone is an African currency that is highly affected by poverty. Africa has a history of scandals and corruption. The country witnessed conflicts and a heinous civil war in the Western African countries. All these led to a downfall of the country’s economy and value. The Ebola infection is an additional and constant factor that affects the country’s population that further consumes financial aid.

4. Lao or Laotian Kip (LAK) 1 INR = 212 LAK

The Lao or Laotian Kip is not a devalued currency but a currency that has had a low rate since the time of its introduction in 1952. Over the years the value of the currency has improved. Also, a railway is planned that will connect Beijing to Laos, which might draw investors to this small country. Although it is the cheapest currency it is a promising one towards improving its value.

5. Indonesian Rupiah (IDR) 1 INR = 179 IDR

In the last seven years, the currency has not improved even the slightest. The factors that have brought devaluation of the currency include its decreasing foreign exchange reserves. Indonesia is heavily dependent on the export market, with the fall of the cost of the commodities the currency value is further devalued.  

6. Uzbekistani Som (UZS) 1 INR = 139 UZS

The government of Uzbekistan has employed many means to improve the economy of the country. But none of them have proved to be successful. The most recent one is the reformatory measure, so the changes that these measures will bring are yet to be explored in terms of currency value. 

The Covid-19 pandemic had an impact on the economy of the country, though the data suggests that Uzbekistan resumed its internal operations in the third quarter of the year 2022. However, the decrease in industrial output has increased unpredictability in the currency’s future.

7. Guinean Franc (GNF) 1 INR = 105 GNF

The Guinea country faces corruption and political instability that leads to a weakened currency. The country’s currency value is getting devalued by the passing years.

8. Paraguayan Guarani (PYG) 1 INR = 87 PYG

The Paraguay country faces a terrible economic downturn as a result of high inflation, a high unemployment rate, increase in poverty and corruption. These factors leave a negative impact on the value of the currency.

9. Ugandan Shilling (USH) 1 INR = 45 UGX

Uganda faced several setbacks under Idi Amin’s governance. The policies developed by the president have impacted negatively on the country’s economy that even includes immigration policies. The impacts still affect the development of the country. However, the last few years witnessed improvement in its value but not more than 5% of devaluation.

10. Iraqi Dinar (IQD) 1 INR = 17 IQD

The Iraq currency Iraqi dinar is issued by the country’s central bank and is subdivided into 1,000 fils. Since the year 1990, inflation made the fils devoid of much value. In the past decade, the country also faced political instability.

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Factors That Can Affect The Exchange Rates

The foreign exchange rate is an essential thing to determine a country’s economic health. The value of the currency depends on it. Let us see the important factors that impact the value of the currencies.

Inflation Rate

Market inflation may impact currency exchange rates. The price of goods and services will gradually rise steadily when inflation is low. When the inflation rate declines steadily, the currency value increases and vice versa.  

Recession

Recession affects the country’s economic growth then the foreign exchange market makes no exception to it. During the recession, the interest rates will fall. Foreign capital would be devalued as a result of this. The value of the currency drops when foreign capital is scant and the interest rates are low.

Interest Rate

The higher the interest rate means the value of the currency will go down. It is again an important factor that can affect the exchange rate.

Government Debt

Government debt or public debt is government-owned debt and is a public liability. If one country is facing debt, the chances of having more money are slight with the potential of causing inflation. The foreign investors would be in two minds about investing considering the high inflation which in return would depreciate the value of the currency.

Political Instability

The lack of stability in the government will harm the country’s economic performance as a result the investors will not profit from it. A stable administration attracts many foreign investors. The domestic currency value might be increased by the investment in addition to boosting foreign capital.

Let us see the table below to understand the currency values as per Indian rupees as of May 2023.