5 World‘s Most Valuable Currencies: Beyond the US Dollar
When most people think of the world’s strongest currencies, the US dollar immediately comes to mind. Yet surprisingly, the dollar ranks only tenth on the list of the most valuable currencies globally. In fact, several Middle Eastern currencies—backed by vast oil reserves and prudent economic policies—dominate the top tier, leaving the greenback in their dust.
Kuwaiti Dinar (KWD) – The Undisputed Leader
Exchange Rate: 1 KWD ≈ $3.25 USD
The Kuwaiti Dinar has held the title of the world’s strongest currency for years. Kuwait owns around 7% of proven oil reserves in the world—around 101.5 billion barrels, which fuels its huge export revenues and accounts for an unparalleled value of the dinar. The nation’s daily output of over 2.8 million barrels ranks it as the world's tenth-largest oil producer.
Unlike its Gulf State neighbors, Kuwait Finance House has been pegging the Kuwaiti Dinar to a weighted basket of international currencies for some time now. As well as the US dollar, this basket contains Euro, British Pound and Japanese Yen. This strategy insulates its currency reforms from fluctuations on the world stage.
Bahraini Dinar (BHD) – The Financial Hub
Exchange Rate: 1 BHD ≈ $2.65 USD
Second in the world in terms of strength, the Bahraini Dinar is also backed by oil and gas exports, which -although they only make up 15% of GDP- add to its clout remarkably. Bahrain has successfully diversified its economy as well: today it has become a key financial hub within the Gulf and this attracts much foreign investment into banking, insurance and financial services for example. Since 1980 the Bahraini dinar has been pegged at 0.376 BHD to 1 USD, giving it a handhold on monetary policy and anti-inflammatory incentives.
Omani Rial (OMR) – The Oil Powerhouse
Exchange Rate: 1 OMR ≈ $2.60 USD
The Omani Rial comes third on the list. This is due to the large amount of oil and gas production in that country. As such, 64% of the Oman's export earnings come from oil; 45% of the government's revenue is generated by it; and around one half of Oman's total GDP comes from petroleum exploitation alone. Introduced in the 1970s, the rial has stuck to its US dollar peg for a long time. And investors value that kind of long-term stability. Thanks to the government's fiscal conservatism, the rial holds up well against other global currencies.
Jordanian Dinar (JOD)-The Regional Anomaly
Exchange Rate: 1 JOD ≈ $1.41 USD
Unlike its Gulf neighbors, Jordan has no great oil resources. Still, the Jordanian Dinar is the fourth most prized currency in the world. Why? Under a regime of fixed exchange rates and good monetary policies. The dinar has been pegged to the US dollar for decades, helping to control inflation and build confidence in the currency as well.
The country is strategically located at the crossroads of Asia, Europe, and Africa. Foreign aid and investment are also drawn to Jordan as a centre for trade and transport by its unique location on land borders to those continents-without any natural physical barriers such as mountains or deserts which other nations must overcome in order to cooperate effectively. Jordan’s mixed economy – including services, industries and tourism – means it is less at risk from oil price shocks and helps stabilize the Dinar.
British Pound Sterling (GBP)-The Historic Contender
Exchange Rate: 1 GBP ≈ $1.37 USD
The British Pound, one of the world's oldest currencies still in circulation, comes in fifth. A diverse and highly advanced economy centered on London-which is still one of the largest and most powerful financial markets in world commerce-keeps the pound strong. Decimalised in 1971, it has been a symbol of monetary stability for several centuries. Though the UK has long since lost its empire status, the currency itself is still held as a major reserve asset and traded widely on international finance markets.
