Popular currencies: the cheapest currencies in the country right now - 10 currencies you need to know

The currencies of undervalued countries reflect the economic challenges these nations are facing. When it comes to low exchange rates against the US dollar, the causes can be attributed to various factors, including soaring inflation, political and economic instability, lack of foreign investment, and heavy reliance on exports of natural resources and commodities.

Comparison of undervalued currencies worldwide

What are the characteristics of undervalued currencies around the world?

1. Lebanese Pound (LBP) - The weakest currency

The Lebanese Pound, also known as “Lira,” has been the official currency of Lebanon since 1939, replacing the French franc. Historically, this currency was pegged to the US dollar, but its introduction has been marred by financial crises and ongoing economic and political turmoil.

Impact of economic recession

Lebanon is experiencing one of the most severe economic crises in recent history, causing the Lebanese Pound to lose over 90% of its value in parallel exchange markets since 2019. The country has faced triple-digit inflation and banking system failures, with the government defaulting on debt in 2020.

Detailed currency information

• Abbreviation: LBP
• Issuing country: Lebanon
• Exchange rate: 89,751.22 LBP/USD
• Exchange rate system: Multiple rates with no fixed peg, despite official announcements

2. Iranian Rial (IRR) - Effects of sanctions on the currency

The Rial appeared in the 19th century when Persians adopted this currency. The 1979 Islamic Revolution transformed the country’s economic structure and introduced new monetary policies. Iran has been under strict economic sanctions for a long time, leading to continuous depreciation of the Rial and making it one of the world’s lowest-valued currencies.

Factors causing Rial depreciation

The Rial faces geopolitical tensions, exhaustion from dependence on oil exports, and soaring inflation. Additionally, economic sanctions and government policies causing hyperinflation remain major issues impacting the Rial’s value to this day.

Currency details

• Abbreviation: IRR
• Issuing country: Iran
• Exchange rate: 1 USD = 42,112.50 IRR
• Policy: Pegged to the dollar (officially) but operates with a managed float

3. Vietnamese Dong (VND) - Growing undervalued currency

The Dong has a history linked to the country’s division. In 1954, Vietnam was split into two parts, each creating its own currency. After the war ended, the Dong became the sole national currency.

Notably, after Vietnam began aggressive economic reforms in the 2000s, the economy grew steadily, leading to increased stability of the Dong, although its value remains low compared to major currencies worldwide.

Impact of exchange rate controls on currency value

Vietnam employs a managed floating system, meaning the currency is not tightly pegged to the dollar but allowed to fluctuate within a range set by the central bank. The currency’s depreciation actually benefits Vietnam by making exports more competitive.

Currency information

• Abbreviation: VND
• Issuing country: Vietnam
• Exchange rate: 1 USD = 26,040 VND
• Management system: Managed float referencing a currency basket

4. Laotian Kip (LAK) - Undervalued currency in Southeast Asia

The Kip was introduced in 1952 shortly after Laos gained independence from France. Due to low development levels and economic fragility, the Kip has struggled to compete with stronger currencies.

Laos has experienced political turmoil and economic issues, relying heavily on agriculture and natural resource exports. Foreign investment remains limited, leading to ongoing currency instability.

Post-COVID-19 currency situation

After the global COVID-19 crisis, Laos was heavily affected, with the Kip under additional pressure from rising inflation and limited integration into the global economy.

Currency details

• Abbreviation: LAK
• Issuing country: Lao People’s Democratic Republic
• Exchange rate: 1 USD = 21,625.82 LAK
• Management system: Managed float pegged to the dollar and Thai baht

5. Indonesian Rupiah (IDR) - Emerging market currency with limited stability

The Rupiah was introduced after Indonesia declared independence from the Netherlands in 1945. It has experienced high inflation and long-term instability throughout the 20th century.

Although Indonesia is one of the largest economies in Southeast Asia with the fourth-largest population globally, the Rupiah remains weak due to increasing exhaustion from reliance on commodity exports.

Vulnerabilities of emerging markets

Indonesia’s currency is sensitive to global market sentiments and movements. When global investors shift to safe assets, the Rupiah is sold off, causing its value to decline. Dependence on exports, inflation, and government policy changes also influence its value.

Currency details

• Abbreviation: IDR
• Issuing country: Indonesia
• Exchange rate: 1 USD = 16,275 IDR
• Management system: Free float

6-10. Other undervalued currencies worldwide

Uzbek Sum (UZS)

Since independence from the Soviet Union, Uzbekistan has used the Sum as its national currency. Despite economic reforms, the economy still relies heavily on resource exports and agriculture. Exchange rate: 1 USD = 12,798.70 UZS

Guinean Franc (GNF)

Guinea faces ongoing economic crises, political instability, and a lack of foreign investment. This currency cannot appreciate significantly. Exchange rate: 1 USD = 8,667.50 GNF

Paraguayan Guarani (PYG)

Paraguay’s economy depends heavily on agricultural exports, which puts pressure on the Guarani due to market volatility. Exchange rate: 1 USD = 7,996.67 PYG

Malagasy Ariary (MGA)

Madagascar relies on tourism, agriculture, and resource exports. This currency is unique in that it does not use decimal systems. Exchange rate: 1 USD = 4,467.50 MGA

Burundian Franc (BIF)

Burundi is one of the poorest countries in the world, with an economy focused on subsistence, facing food insecurity and long-standing political issues. The Burundian Franc has the lowest value. Exchange rate: 1 USD = 2,977.00 BIF

Factors influencing the value of undervalued currencies

Exchange rates are not solely determined by destination goals; rather, multiple factors must converge to cause significant currency depreciation. Currency volatility is closely related to interest rates, inflation, public debt, political stability, and the country’s current account balance.

Interest rates and economic conditions

Higher interest rates tend to attract foreign investment. Increased foreign capital inflows raise demand for the country’s currency, boosting its value. Conversely, lower interest rates tend to depreciate the currency.

Role of inflation and stability

Countries with low inflation tend to see their currencies appreciate. Conversely, high inflation causes currencies to depreciate. Political instability also plays a major role, creating uncertainty among investors.

Furthermore, a country’s current account provides vital insights into its economic health. Persistent deficits can hinder foreign investment and ultimately reduce currency value. Economic recession can lead to lower interest rates, halt foreign capital inflows, and cause currency depreciation.

Therefore, the combination of these factors explains why undervalued currencies face such situations.