Top 15 Strongest Currencies in the World in 2024

Have you ever wondered what the strongest currency in the world is or why oil-exporting nations boast some of the most highly-valued foreign exchange (forex) rates?

In this article, we explore the top 15 strongest currencies in the world based on their exchange rates against the US dollar (USD) and explain what factors determine their strength.

Table of Contents Table of Contents

1. Key takeaways
2. What Is Currency Strength?
3. How Is Foreign Currency Priced?
4. What Makes a Currency Strong?
5. Top 15 Strongest Currencies in the World
6. The Bottom Line
7. FAQs
8. References

Show Full Guide

Table of Contents

1. Key takeaways
2. What Is Currency Strength?
3. How Is Foreign Currency Priced?
Show Full Guide
4. What Makes a Currency Strong?
5. Top 15 Strongest Currencies in the World
6. The Bottom Line
7. FAQs
8. References

What Is Currency Strength?

Currency strength is the relative purchasing power of a currency against other currencies.

The US dollar was chosen as the benchmark because of its status as the world’s most dominant vehicle currency. According to the Triennial Central Bank Survey conducted by the Bank for International Settlements (BIS), the US dollar was on one side of 88% of all foreign exchange trades between 2019 and 2022.

How Is Foreign Currency Priced?

Most world currencies implement a floating exchange rate regime where forex rates for a currency are determined by the open market based on its supply and demand relative to other currencies.

Some currencies are “pegged” to a benchmark currency, which means their exchange rate is fixed at a predetermined rate to another currency.

For example, the Gibraltar pound (GIP)? is pegged to the British pound (GBP) at a 1:1 exchange rate, meaning that 1 GIP will always equal 1 GBP.

What Makes a Currency Strong?

Several factors determine currency strength, including inflation rates, political stability, and economic outlook.

Below, we focus on the three key fundamental determinants that are influential in turning a nation’s fiat money into one of the world‘s most powerful currencies.

Terms of Trade

Terms of trade refer to the ratio of a nation’s export prices to import prices. Typically, an increase in a nation’s terms of trade is associated with an appreciation of its currency while a decline in a nation’s terms of trade leads to a depreciation of the exchange rate.

Let’s take a commodity-exporting nation like Australia as our example. A boom in Asian property markets will increase the demand for iron ore, Australia’s chief export. During such times, Australia’s export value will be significantly higher than its import value.

The large inflow of capital into Australia leads to a positive outlook for the nation’s economy. As a result, the Australian dollar sees an increase in demand from money market investors and traders, leading to its price appreciation.

Terms of trade are heavily influenced by commodity prices.

Interest Rate Differentials

Interest rates set by central banks affect the demand for a currency and thus influence its forex rate.

However, the difference in interest rates between various economies (called interest rate differentials) determines the flow of capital.

For example, if interest rates in India decline while other world economies increase their interest rates, the return on Indian assets will become less attractive to investors. The market will sell Indian assets in favor of alternative sovereign assets that offer higher returns on their investment.

Several factors influence interest rates, with the inflation rate being the chief among them. Higher rates of inflation in a nation will typically force its central bank to increase interest rates.

Capital Controls

Central banks have significant influence over a currency’s performance. Some central banks choose to exert more control over forex rates than others. For example, the Bank of Japan is known to actively manipulate the Japanese yen to maintain a certain level of exchange rate that is favorable for its trade.

Governments in Middle Eastern nations like Kuwait keep their currencies pegged at a certain rate to the US dollar or to a basket of world currencies. These governments strictly check foreign exchange volumes to minimize currency speculation and volatility.

Top 15 Strongest Currencies in the World

Here is a list of the strongest currencies in the world as of June 5, 2024.

15. Israeli Shekel (ILS)

Israel was the number 27 economy in the world in 2022, with a GDP of $525 billion. According to OEC data, the country’s major export products are diamonds, integrated circuits, refined petroleum, medical instruments, and potassic fertilizers. Israel’s top export destinations are the United States, China, Palestine, Ireland, and the United Kingdom.

14. Emirati Dirham (AED)

United Arab Emirates was the number 28 economy in the world in terms of GDP in 2022, accounting for $507,06 billion. According to OEC data, the nation’s top export products are crude petroleum, refined petroleum, broadcasting equipment, and petroleum gas. India, Japan, Saudi Arabia, and Iraq are the UAE’s primary export destinations.

In 2022, the United Arab Emirates was the world’s biggest exporter of rolled tobacco.

13. Qatari Riyal (QAR)

Qatar is one of the fastest-growing economies in the Middle East, with petroleum and natural gas being the cornerstones of the country’s prosperity. According to OEC, the country’s top export products are petroleum gas, crude petroleum, refined petroleum, nitrogenous fertilizers, and ethylene polymers. China, India, Japan, South Korea, and the United Kingdom serve as Qatar’s primary export destination countries.

In 2022, Qatar was the world’s largest exporter of sulfur.

12. Bulgarian Lev (BGN)

Bulgaria has undergone a significant transformation from a highly centralized, planned economy to a market-based, open, upper-middle-income economy. With a GDP of $89 billion in 2022, Bulgaria was the number 70 economy in the world.

According to OEC data, the top Bulgarian exports are refined petroleum, petroleum gas, refined copper, wheat, and electricity. The major destination countries are Germany, Romania, Italy, Turkey, and Greece.

In 2022, Bulgaria was the world’s biggest exporter of iron pyrites.

11. New Zealand Dollar (NZD)

New Zealand is the world’s biggest exporter of milk. According to the OEC, the nation exported concentrated milk worth $11.1 billion in 2021. Rough wood, frozen meat, and butter were among the island nation’s top exports. China, Australia, the US, Japan, and South Korea were New Zealand’s top export destinations.

10. Australian Dollar (AUD)

The Australian dollar, also known as the “Aussie,” is a commodity currency due to Australia’s position as a major iron ore and coal exporter. OEC data showed that Australia’s top exports were iron ore, coal, petroleum gas, gold, and wheat. The country’s top export destinations were China, Japan, South Korea, India, and Chinese Taipei.

9. Canadian Dollar (CAD)

Canada is a crude oil-exporting nation. Like the Aussie, the Canadian dollar is also a commodity currency, and its performance is closely associated with global oil prices. OEC data showed crude petroleum, cars, petroleum gas, gold, and wood are its top export products.

8. Singapore Dollar (SGD)

Singapore is a high-income economy known for its business-friendly regulatory environment, which has helped stimulate its economic growth. OEC data showed Singapore’s top exports were integrated circuits, refined petroleum, and gold. The city-state was the world’s biggest exporter of glass working machines in 2021.

7.? Brunei Dollar (BND)

Brunei is a high-income nation located in South-East Asia. OEC data showed the nation exported petro-goods, including refined petroleum, gas, hydrocarbons, and acyclic alcohols to Singapore, China, Japan, Australia, and Malaysia.

6. Euro (EUR)

The Euro came into existence in 1999 and is adopted across all European Union states except Denmark. According to BIS, EUR was the second most traded currency in the world between 2019 and 2022.

5. Swiss Franc (CHF)

The Swiss franc is a highly sought-after currency due to its status as a safe-haven currency. The Swiss franc has a reputation for retaining or increasing its value during global economic downturns.

4. British Pound (GBP)

The British Pound is a highly liquid currency, with only the US dollar, Euro, and Japanese Yen trading more than the sterling in foreign exchange markets between 2019 and 2022.

According to the OEC, the UK’s top exports were cars, gold, gas turbines, crude petroleum, and packaged medicaments. Its top export destinations were the US, Germany, Netherlands, Ireland, and Switzerland. In 2021, the UK’s imports exceeded its exports by $261 billion.

3. Omani Rial (OMR)

Oman is a coastal nation in Middle-east Asia bordered by Saudi Arabia, Yemen, and UAE. Oman’s economy is dependent on its oil exports. OEC data showed that Oman mainly exported petro-goods to China, India, UAE, South Korea, and Saudi Arabia.

2.? Bahrain Dinar (BHD)

Bahrain is an island nation in Middle-east Asia between Qatar and Saudi Arabia. Bahrain’s chief exports were petroleum products, raw aluminum, and iron ore.

1. Kuwaiti Dinar (KWD)

Kuwait’s wealth is primarily derived from crude oil exports. According to the OEC, the nation posted an export value of $58.2 billion in 2021 compared to an import value of $33.8 billion.

The Bottom Line

It is important to note that this list compiles the currencies with the highest exchange rates against the US dollar. However, valuation alone does not make a currency popular.

As for the world’s most powerful currency, that title goes to the US dollar due to the US position as a superpower and global financial leader.

FAQs