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Top 10 Countries with the Most Severe Currency Depreciation in 2568 Globally
In the international financial markets, some countries’ currencies face persistent depreciation pressures. This phenomenon often stems from multiple factors such as inflation, a single economic structure, insufficient foreign investment inflows, political instability, and international sanctions. This article provides an in-depth analysis of these 10 currencies with the lowest values and the underlying economic logic.
Comparison Table of the 10 Lowest Valued Currencies Globally
In-Depth Analysis of the World’s Lowest Valued Currencies
1. Lebanese Pound (LBP): A Typical Case of the Middle East Debt Crisis
Since becoming the official currency in 1939, the Lebanese Pound has witnessed the country’s ups and downs. Once pegged to the dollar, it has now depreciated sharply due to long-term economic and political crises.
Signs of Economic Collapse
Lebanon is experiencing its most severe recession in modern history. Since 2019, the country has fallen into triple-digit inflation, widespread poverty, and banking system paralysis. The government declared default on debt in 2020, with the black market devaluation exceeding 90%. This not only reflects economic hardship but also exposes systemic financial risks.
Failure of the Exchange Rate Mechanism
2. Iranian Rial (IRR): Currency Dilemma Under Sanctions
The history of the Iranian Rial’s depreciation is essentially a history of sanctions. Since the 1979 Islamic Revolution, Iran has experienced decades of economic isolation and currency pressure.
Dual Impact of Sanctions and Isolation
Strict sanctions by the US and its allies have put pressure on Iran’s economy. The country relies heavily on oil exports, with a lack of diversification in its economic structure. Fluctuations in the Iran nuclear deal negotiations, the aftermath of the Iraq war, and poor government management have all contributed to rising inflation and further devaluation of the Rial.
Limitations of Monetary Policy
3. Vietnamese Dong (VND): A Typical Case of Developing Countries
Since reunification after the Vietnam War, the dong has experienced inflation and reform pains but has gradually stabilized after 2000. Today’s Vietnamese dong, while low in value, is backed by different economic logic.
Economic Growth and Weak Currency Paradox
Vietnam’s economy continues to grow, yet the dong maintains a relatively low USD exchange rate. This is because the central bank enforces strict exchange controls and limited convertibility policies. Interestingly, this weakness actually benefits Vietnam—its trade surplus continues to expand, and export competitiveness is enhanced. The relative softness of the dong further consolidates Vietnam’s price advantage in global markets.
Managed Floating Exchange Rate Strategy
4. Laotian Kip (LAK): Reflection of Underdeveloped Economy
Laotian kip was introduced in 1952, initially pegged to the French franc. After reforms in the 1990s, the kip began to fluctuate more frequently.
Developmental Constraints on Currency Performance
Laos is one of the least developed countries in Southeast Asia. Its economic growth is far below neighboring countries, mainly relying on agriculture and natural resource exports. Limited foreign investment inflows, slow development of industry and services, and structural issues have long suppressed the international value of the kip.
Post-Pandemic Pressures
Post-pandemic, the kip faces greater pressure. Inflation surges, and the economy is in trouble. The kip remains one of the weakest currencies globally, reflecting Laos’s slow economic development and insufficient integration into international finance.
5. Indonesian Rupiah (IDR): Fragility of Emerging Markets
The Indonesian rupiah has long been listed among the cheapest currencies worldwide. As an emerging market, Indonesia has a large population and significant economic status, but the rupiah remains relatively weak.
Commodity Dependence Trap
Indonesia, the fourth most populous country globally, has experienced significant economic growth over the past two decades. However, it over-relies on commodity exports, especially energy and raw materials. This makes the rupiah highly sensitive to commodity price fluctuations. When global commodity prices fall, the rupiah suffers immediate impact.
Systemic Risks of Emerging Markets
As an emerging market economy, the rupiah is vulnerable to sell-offs during global investor “flight to safety.” Although the central bank intervenes in markets, foreign exchange reserves are limited, constraining capacity. Despite being one of Southeast Asia’s largest economies, dependence on foreign capital, high inflation, and policy environment factors have long restrained the rupiah from strengthening.
6. Uzbek Sum (UZS): Transition Dilemma from Soviet Legacy
Uzbekistan adopted the sum as its official currency after independence in 1991. Although reforms have advanced since the mid-2010s, economic transformation still takes time.
Controlled Economy and Exchange Rate Pressure
The sum is under strict government control, with limited foreign investment inflows. Foreign exchange controls and delayed economic liberalization further restrict the currency’s international value. The country’s economy still relies heavily on natural resource exports, with high inflation and insufficient diversification.
Slow but Clear Reform Path
The government is gradually opening the economy, which may help stabilize the sum in the future. Currently, however, currency depreciation and inflation remain major challenges, and the sum is still among the weakest currencies globally.
7. Guinean Franc (GNF): Microcosm of Africa’s Economic Struggles
The Guinean franc was introduced in 1959, replacing the French franc. Post-independence Guinea has weak infrastructure, limited foreign investment, frequent political turmoil, ongoing economic crises, and persistent pressure on the franc.
Lack of Economic Diversification
The fundamental reason for the franc’s inability to appreciate is Guinea’s severe lack of economic diversification. The country relies heavily on agriculture and mining, with political instability and corruption further hindering development. The low value of the franc reflects ongoing economic and political challenges.
Developmental Challenges Hard to Overcome
8. Paraguayan Guarani (PYG): The Fate of an Agricultural Nation
The Paraguayan Guarani dates back to 1845. The country has faced multiple crises and inflation storms, including the Chaco War (1932-1935) and the debt crisis of the 1980s.
Dependence on Agricultural Exports
The Paraguayan economy heavily relies on agricultural exports, especially soybeans. This structure makes the Guarani extremely sensitive to global agricultural prices. Long-term trade deficits, rising debt levels, and limited financial instruments have led to persistent foreign currency demand exceeding local currency supply.
Structural Dilemmas Difficult to Improve
9. Malagasy Ariary (MGA): Island Economy’s Isolation
The Ariary became the official currency of Madagascar in 2005, replacing the Malagasy franc. Interestingly, it is one of the few currencies worldwide that does not use a decimal system (1 Ariary = 5 Iraimbilanja).
Fragile Foundations of Agriculture and Tourism
Madagascar’s economy heavily depends on agriculture, tourism, and natural resource exports. While relatively stable, it is highly vulnerable to climate events and political instability. Poverty remains widespread, and financial tools are limited. The country’s options for responding to inflation or external shocks are limited.
Island Economy’s Isolation Effect
10. Burundian Franc (BIF): Currency of the World’s Poorest Country
The Burundian franc was introduced in 1964 after independence, replacing the Belgian Congo franc. The structure has never undergone substantial change.
Economic Reality of Absolute Poverty
Burundi is one of the poorest countries globally, with an economy based on subsistence agriculture. It faces long-term trade deficits, limited industrial activity, and heavy reliance on foreign aid. Inflation, food insecurity, and political turmoil create ongoing economic pressures.
Multiple Challenges Interwoven
Deep Factors Influencing Exchange Rates
Exchange rates are determined by multiple economic variables. Interest rates, inflation, public debt, political stability, and current account balances all influence currency fluctuations.
Interest Rates and Capital Flows
Higher interest rates generally attract foreign investment, increasing demand for the domestic currency and pushing up its value. Conversely, low interest rates weaken this attraction.
Core Role of Inflation
Countries with low inflation rates often see their currencies appreciate, while high inflation leads to depreciation. Most of the currencies listed among the ten lowest values face significant inflationary pressures.
Indicators of Current Account Health
A current account deficit can hinder investment and weaken the currency. Conversely, a surplus supports the currency. During economic downturns, interest rates tend to fall, foreign investment inflows decrease, the currency depreciates, and a vicious cycle ensues.
These combined factors explain why these countries’ currencies continue to face depreciation pressures, making them the lowest valued currencies in the world.