ALBAWABA – If you think the strongest currency in the world is the United States (US) dollar, well, you’re right, and you’re wrong.
According to the Bank of International Settlements, the US dollar is involved in almost 90 percent of foreign exchange and accounts for 85 percent of spot transactions, forward and swap markets. Half of global trade and three-fourths of Asia-Pacific trade are denominated in US dollars.
That, in addition to it being the 10th strongest currency in terms of value, is why it is generally regarded as the strongest currency in the world.
However, perhaps surprisingly, the greenback is not the strongest of the 180-odd traditional fiat currencies recognised as legal tender worldwide. And, you'd be surprised which is the strongest currency in the world in terms of performance this year.
The strongest currency in the world is Arab…
Here’s a look at the top 10 strongest currencies in the world, based on their relative value against the US dollar, and surprisingly Arab currencies have taken over all the top places.
The US dollar is the 10th strongest currency in the world - Shutterstock
Forbes analysed the strongest currencies, based on the number of units of foreign currency received in exchange for one US dollar.
1 Kuwaiti dinar (KWD)
The Kuwaiti dinar is the strongest currency in the world with 1 Kuwaiti dinar buying $3.26 ($1 equals 0.31 Kuwaiti dinars).
Kuwait is located between Saudi Arabia and Iraq, earning much of its wealth from being a leading global exporter of oil. The Kuwaiti dinar was introduced in the 1960s and was initially pegged to the British pound before being re-pegged to an undisclosed basket of currencies.
2 Bahraini dinar (BHD)
The Bahraini dinar is the second strongest currency in the world with 1 Bahraini dinar buying $2.65 (or $1 equals 0.38 Bahraini dinars).
Bahrain is an island nation in the Arab Gulf off the coast of Saudi Arabia. Like Kuwait, the country earns much of its wealth from oil and gas exports. The Bahraini dinar entered circulation in 1965 and is pegged to the US dollar.
3 Omani rial (OMR)
The Omani rial is the third strongest currency in the world with 1 Omani rial buying $2.60 (or $1 equals 0.38 Omani rial).
Oman sits between the United Arab Emirates and Yemen at the tip of the Arabian peninsula. Like its other wealthy neighbours, Oman is a major exporter of oil and gas. The Omani rial was introduced in the 1970s and is pegged to the US dollar.
4 Jordanian dinar (JOD)
The Jordanian dinar is the fourth strongest currency in the world with 1 Jordanian dinar buying $1.41 US dollars (or $1 equals 0.71 Jordanian dinar).
The Jordanian dinar is the 4th strongest currency in the world, but the country suffers from slow growth and high debt - Freepik
Jordan is a largely land-locked country in the Middle East, with access to the sea through the Gulf of Aqaba only. Unlike their neighbours to the south, Jordan does not depend on oil and gas exports, and has struggled with sluggish economic growth and rising debt. The Jordanian dinar entered circulation in 1950 and is pegged to the US dollar.
5 British pound (GBP)
The British pound is the fifth strongest currency in the world with 1 British pound buying $1.28 (or $1 equals 0.78 British pounds).
Britain is the sixth largest country by Gross Domestic Product (GDP), according to the World Bank. The pound was first introduced in the 1400s before being decimalised in 1971. It is free-floating and thus not pegged to other currencies.
5 Gibraltar pound (GIP) - Tie
The Gibraltar pound is the joint fifth strongest currency in the world with 1 Gibraltar pound buying $1.28 (or $1 equals 0.78 Gibraltar pounds).
Gibraltar is located at the southern tip of Spain and is officially a British territory. The Gibraltar pound was first introduced in the 1920s and is pegged to the British pound (at par, meaning that one GIP equals one GBP).
6 Cayman Islands dollar (KYD)
The Cayman Islands dollar is the sixth-strongest currency in the world with 1 Cayman Islands dollar buying $1.20 (or $1 equals 0.83 Cayman Islands dollars).
The Cayman Islands is a British territory in the Caribbean and is an offshore financial centre. The Cayman Islands dollar was first introduced in the 1970s and is pegged to the US dollar.
7 Swiss franc (CHF)
The Swiss franc is the seventh strongest currency in the world with 1 Swiss franc buying $1.15 (or $1 equals 0.87 Swiss francs).
The Swiss franc is the official legal tender of Switzerland and Liechtenstein and is seen as a safe haven due to Switzerland’s political stability. The Swiss franc was introduced in 1850 and was later briefly pegged to the Euro before moving to a free-float.
8 Euro (EUR)
The Euro is the eighth strongest currency in the world with 1 Euro buying $1.10 (or $1 equals 0.91 euros).
The Euro is the official currency of the Eurozone, being 20 out of the 27 countries that form part of the European Union. The physical currency entered circulation in 2002 and is free-floating.
10 US dollar (USD)
The US dollar is the 10th strongest currency in the world, worth exactly 1 against itself. All other units of currency across the globe are worth less than a US dollar.
The US dollar is not the strongest currency in the world in terms of value but it is the most circulated currency in the world - Freepik
Created in the 1700s, the US dollar is legal tender in the USA, other US territories and sovereign nations including Ecuador and Zimbabwe.
The US is the world’s largest economy by GDP and the US dollar is by far the most-traded currency globally.
The US dollar is also the largest reserve currency in the world (the currency most held by central banks) and is the currency used to price many commodities, including oil, gold and copper.
