(CNN Spanish) – Due to the strong inflation that seems to be rising all over the world only, different currencies are starting to suffer blows and reflecting the uncertainty in the economy with two years of the pandemic, the Russian war in Ukraine affecting oil prices and slowdown in the growth of countries is fundamental as China.
That is why it is worth asking the question, What are the 10 most powerful currencies in the world? (And before you get to first place, we tell you up front that it is not the dollar. Although this is the currency most used for international operations).
A strong currency is determined by the amount of goods and services you can buy with and how much other currency you can get for one unit of the initial currency, according to an analysis by Forex.com, a market trading platform. Forex. Since the dollar is the most widely used currency in the market, it serves as a reference point for calculating the value of other currencies. Thus, the more dollars you need to buy one unit of another currency, the stronger it will be. If you need less dollars, it will be considered weaker.
In fact, the dollar and the euro reached parity for the first time in 20 years on July 12, after the former strengthened against the latter, which recorded a 12% decrease compared to last year.
Top 10 most powerful currencies in the world
- Kuwaiti Dinar
- Bahraini dinar
- Omani Rial
- Jordanian dinar
- Sterling pound
- Cayman Islands dollar
- Swiss Franc
- Canadian dollar
Look at its exchange rate against the dollar in this table:
Why is the Kuwaiti dinar so strong?
If you are not tied to the foreign exchange market, you may not have heard of the Kuwaiti dinar before. And don’t worry: it’s not as widely available as the dollar and the euro. The Central Bank of Kuwait explains that since 2007, the dinar has been pegged to an “undisclosed basket of international currencies for Kuwait’s major trading and financial partners.” the reason? According to the bank, the exchange rate policy seeks to “maintain and enhance the relative stability” of the Kuwaiti dinar against other currencies, as well as protect the local economy from the effects of imported inflation. “This stems from the fact that between 2003 and 2007 the currency was pegged to the dollar. But Kuwait changed Its policy “after exhausting all attempts to absorb the negative effects of the depreciation of the dollar against major currencies over a long period.”
Now, how can a country as small in size as Kuwait manage to hoard the strongest currency? The answer lies in oil. The CIA Factbook states that the country’s economy is very rich due to the amount of crude oil reserves it has: about 102 billion barrels, or 6% of global reserves. According to CIA data, oil accounts for 92% of Kuwaiti export earnings and 90% of government revenue.
The Encyclopedia Britannica on the country’s economy explains: “Almost all of Kuwait’s wealth is derived directly or indirectly, through foreign investment, from the extraction and processing of oil.” He points out that the essential element in the country’s development is the continuous and rapid expansion of the oil industry since 1970. The profits that Kuwait made in the following years at the expense of oil and investments gave it one of the highest incomes per capita. high in the world. In 1990, the country nearly depleted income from foreign investment due to the invasion it suffered from Iran under Saddam Hussein. But recovered from the recovery in oil prices in the 2000s, with oil being the main center of the Kuwaiti economy, other sectors such as agriculture, manufacturing and trade are weak, according to Encyclopedia Britannica.