In this article, we discuss the 15 worst performing currencies of 2023.
A rise in interest rates by the Federal Reserve in the United States was expected to push the US dollar, the official currency in the country and the most popular globally, lower this year. However, robust economic data from the US, as well as a slowdown in major economies around the globe, has fueled rebound growth in the US dollar. This growth has also pressured the economics of prominent world powers, like China and Japan, who have been forced to resort to stimulus measures aimed at shoring up their local currencies.
Prominent financial stocks in the US like Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), and JPMorgan Chase & Co. (NYSE:JPM) have all jumped in value due to the prevailing economic conditions. Per data from the Commodity Futures Trading Commission, the net short bets on the dollar shrank to $7.17 billion in early September, from $21.28 billion in late July. The July figure was a two-year high. Market experts, like Vassili Serebriakov, a foreign exchange and macro strategist at investment bank UBS, believe the data highlights the strength of the US economy against the rest of the world.
The strength of the US dollar can be viewed in context of the challenging economic conditions in China and loose monetary policy in other developing countries. Surging global prices for energy and food are also contributing to this strength in the dollar as other currencies go on a downward spiral. Japanese and Chinese authorities, as well as governments around the world, are stepping up regulations on foreign exchange markets to stop the rut. Edward Moya, a senior market analyst with OANDA and a veteran global currency strategist, believes that actions need to follow statements from fiscal chiefs.
Per Moya, the markets are not convinced of Japanese attempts to deal with currency rates and that attempts to limit the liquidity of the yuan are likely not to overcome the pressure a weakening economy has placed on the currency. The strength of the US dollar can be measured by the US dollar index, which measures the performance of the USD against a basket of global currencies. In the past four weeks, this index is up by nearly 3%, to the highest levels seen since March. The past week has been especially kind on the index as it registered a jump of nearly 2% in a few days.
The strength of the dollar has hit currencies in developing nations. Coupled with rising inflation, inaction on parts of central banks, and trade deficit numbers, several currencies have nose-dived in value over the past few months. Government in these nations, like Turkey, Egypt, Pakistan, Lebanon, and Syria, have all been forced to look to international lenders like the International Monetary Fund and the World Bank for dollar inflows to stabilize the worsening economic conditions. Whether these bailouts are effective in the face of loose monetary policies is still up for debate.
Our Methodology
In this article, we will list the 15 worst performing currencies of 2023. The ranking is calculated by calculating the percentage decrease in value of the currencies in terms of the US dollar value. The currencies in which the percentage decrease in value in terms of the US dollar are the highest are considered the worst performing. Data for this purpose has been taken from foreign exchange company XE. An initial data set comprising the 50 worst currencies with the highest value against the US dollar on January 2, 2023 was used. The percentage decrease was calculated by comparing this value against the worth of the currency against the US dollar on September 15, 2023. Digital coins were excluded from the list.
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Worst Performing Currencies of 2023
15. Zambian Kwacha
Price Against 1 USD on January 2, 2023: 18
Price Against 1 USD on September 15, 2023: 20
Percentage Decline in Price in 2023: 11%
The Kwacha is the currency of Zambia, a country in Africa that borders Zimbabwe. The country used the British pound as the legal tender till 1964 before shifting to Kwacha. The Kwacha has taken a hit against the US dollar in recent months as private sector spending contracts, inflation hits record highs, and the central bank of the country raises interest rates to around 10% to combat rising prices. The Zambian currency is subject to uncertainty due to debt restructuring and dwindling copper production.
Top firms like Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), and JPMorgan Chase & Co. (NYSE:JPM) have all warned investors of the unstable economic situation in Zambia.
14. South African Rand
Price Against 1 USD on January 2, 2023: 17
Price Against 1 USD on September 15, 2023: 19
Percentage Decline in Price in 2023: 11%
South African Rand is the official currency of South Africa. One of the reasons for the bad performance of the Rand this year has been the interest rate hikes in the US that have had a net negative impact on emerging economies. Another important factor has been Chinese influence in the country. China is the biggest trading partner of South Africa and reports of a slowdown in the Chinese economy have hit the currency throughout the year, although fresh stimulus measures from Beijing have provided some monetary relief in recent weeks.
13. Rwandan Franc
Price Against 1 USD on January 2, 2023: 1070
Price Against 1 USD on September 15, 2023: 1207
Percentage Decline in Price in 2023: 12.8%
Rwandan Franc is the official currency of Rwanda, a country in Africa that borders Uganda. Stubborn inflation has forced the central bank in the country to raise key interest rates this year, resulting in a downward spiral with regards to the currency. Despite the rate increases, inflation numbers in the country continue to make headlines. In August 2023, the annual inflation rate in Rwanda increased to 17.4%, up from 17.3% in July.
12. Lao Kip
Price Against 1 USD on January 2, 2023: 17279
Price Against 1 USD on September 15, 2023: 19949
Percentage Decline in Price in 2023: 15%
Lao Kip is the legal tender in Laos, a Southeast Asian country bordered by Myanmar and China. Kip has been the official currency in the country since 1955. A spike in commodity prices and a tightening of global financial conditions have resulted in Kip losing value against the US dollar this year. The proximity to China and the impact of a slowing Chinese economy have also made it harder for the Kip to gain in value. External liquidity pressures, a widening circular debt, and large external debt repayments all continue to haunt the currency.
11. Sierra Leonean Leone
Price Against 1 USD on January 2, 2023: 18854
Price Against 1 USD on September 15, 2023: 22457
Percentage Decline in Price in 2023: 19%
Sierra Leonean Leone is the official currency of Sierra Leone, a country in West Africa that borders Guinea. High energy and food prices, partly due to the Russian invasion of Ukraine, have forced the poor African country to turn to the International Monetary Fund (IMF) for loan programs. Foreign exchange reserves of the country are also dwindling, forcing further pressure on the local currency. This situation is expected to continue in the coming months and the country remains at risk of debt distress.
10. Congolese Franc
Price Against 1 USD on January 2, 2023: 2036
Price Against 1 USD on September 15, 2023: 2466
Percentage Decline in Price in 2023: 21%
Congolese Franc is the official currency of the Democratic Republic of Congo. The currency has depreciated against the US dollar this year as the government amps up spending to fight the M23 rebel group. Salary arrears payments and rising inflation have contributed to this decline as well. The economy of the country is reliant on imports and this has also increased economic instability. Per the World Bank, the country is one of the poorest in the world, with about two-thirds of the population of 100 million living on less than $2.10 a day.
9. Egyptian Pound
Price Against 1 USD on January 2, 2023: 24
Price Against 1 USD on September 15, 2023: 30
Percentage Decline in Price in 2023: 25%
The Egyptian Pound is the official currency of Egypt, the 14th-most populated country in the world, and the third-most populated in Africa. The annual urban inflation rates in the country have skyrocketed in recent months, touching 37.4% in August this year, up from 36.5% in the previous month. These figures remain significantly above the target range of the central bank and market expectations. In a country where a disproportionately large number of inhabitants live in urban areas, this inflation, coupled with macro pressures and a shortage of foreign currency, has resulted in a strong depreciation of the currency.
8. Pakistani Rupee
Price Against 1 USD on January 2, 2023: 226
Price Against 1 USD on September 15, 2023: 296
Percentage Decline in Price in 2023: 31%
Pakistani Rupee is the official currency of Pakistan, a South Asian country that borders India and China. Persistent inflation, an import economy, and a large circular debt crisis are some of the reasons why the Rupee has faced strong headwinds in recent months. A debt restructuring plan by the government, which included going to the IMF for help, has also been on the radar of investors who want to put money into the Pakistani economy. The Rupee has been gaining against the US dollar in recent weeks but it is not clear whether these gains will translate to meaningful stability in the economic domain.
7. Russian Ruble
Price Against 1 USD on January 2, 2023: 71
Price Against 1 USD on September 15, 2023: 96
Percentage Decline in Price in 2023: 35%
Russian Ruble is the official currency of Russia, the largest country in the world that has a huge geopolitical influence on Europe and Asia. The Russian invasion of Ukraine last year forced Western countries to impose tough sanctions on Russian imports. These sanctions even had an impact on top Russian exports such as energy and food, driving up global inflation numbers and contributing to a freefall in the value of the Ruble against the US dollar. These pressures remain intact this year, as Moscow deals with internal rebellions over the war.
6. Burundian Franc
Price Against 1 USD on January 2, 2023: 2070
Price Against 1 USD on September 15, 2023: 2832
Percentage Decline in Price in 2023: 36%
Burundian Franc is the official currency of Burundi, a country in Africa that borders Rwanda. Burgeoning government debt, persistent inflation, and rising food prices have all contributed to a decline in the value of the local currency against the US dollar this year. Governmental policies to tackle economic instability, which include the issuing of new 5,000 and 10,000 Burundian franc banknotes, have not been met with the expected reaction, as shortages lead to mass protests and increased economic skepticism.
Top firms like Mastercard Incorporated (NYSE:MA), PayPal Holdings, Inc. (NASDAQ:PYPL), and JPMorgan Chase & Co. (NYSE:JPM) have all warned investors of the unstable economic situation in Burundi.
5. Turkish Lira
Price Against 1 USD on January 2, 2023: 18
Price Against 1 USD on September 15, 2023: 26
Percentage Decline in Price in 2023: 44%
Turkish Lira is the official currency of Turkey, a country with roots in both Europe and Asia. Since it is an important global crossroads, the economic situation in Turkey has affected all neighboring economies. The prime factor behind the deviation has been the skyrocketing inflation. The annual inflation rate in the country accelerated for the second consecutive month to nearly 59% in August, up from around 48% in July, and surpassing market forecasts of near 56%. The central bank has raised key interest rates to combat this, resulting in further devaluation of the local currency.
4. Argentine Peso
Price Against 1 USD on January 2, 2023: 178
Price Against 1 USD on September 15, 2023: 349
Percentage Decline in Price in 2023: 96%
Argentine Peso is the official currency of Argentina, the famous South American country that won the FIFA World Cup in 2022. Unlike the highs from the football triumph, the local currency has taken a beating on the economic field. There are several reasons for this devaluation. For example, the current account deficit of the country has been waiting to record levels since 2018, the industrial output has been contracting, the trade gap has been increasing, and high inflation has led to record rate hikes, essentially bringing the economy to a halt.
3. Syrian Pound
Price Against 1 USD on January 2, 2023: 2512
Price Against 1 USD on September 15, 2023: 13001
Percentage Decline in Price in 2023: 417%
The Syrian Pound is the official currency of Syria, the Middle Eastern country that has been in a state of internal war since 2011. Even though the war-like situation has stabilized in contextual terms over the past few months, the years of conflict have left the economy of the country in tatters. The loss of oil-producing territories in the north of the country, as well as a meltdown in the economy of neighboring Lebanon, have all contributed to the further deviation of the Syrian pound in recent months.
2. Zimbabwean Dollar
Price Against 1 USD on January 2, 2023: 672
Price Against 1 USD on September 15, 2023: 4820
Percentage Decline in Price in 2023: 617%
Zimbabwean Dollar is the official currency of Zimbabwe, a country in Africa bordering Zambia and South Africa. A combination of factors, including the geopolitical pressures, inflation highs, and central bank missteps, have resulted in a downward spiral for the local currency that shows no signs of stopping. Unlike other countries in the region or around the world, the Zimbabwean dollar has depreciated by a staggering 617% so far this year as investors take refuge in the solidity that the US dollar offers in the face of economic instability.
1. Lebanese Pound
Price Against 1 USD on January 2, 2023: 1507
Price Against 1 USD on September 15, 2023: 15021
Percentage Decline in Price in 2023: 896%
The Lebanese Pound is the official currency of Lebanon, a country in the Middle East bordered by Syria and Israel. A combination of factors, including the impact of the COVID-19 pandemic, an explosion at an important port in 2020, and the Russian invasion of Ukraine, forced the central bank in the country to print more money, essentially erasing the value of the local pound and causing inflation and the US dollar to soar in value. The country pinned hopes on the IMF for a turnaround but the conditions set by the world lender have forced a rethink of policies in the government, leading to a slowdown in the economy that is expected to last for several months before the situation can be improved.
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Disclosure. None. 15 Worst Performing Currencies of 2023 is originally published on Insider Monkey.
