Many acknowledge Africa’s omission from global currency rankings, considering it houses the world’s ten least developed nations. Despite this, certain African currencies hold influence in the foreign exchange market. Thus, here’s a compilation of the strongest legal tenders on the continent in 2023.
The prevailing economic challenges across the continent are exemplified by the Sao Tomean Dobra, standing as the lowest-valued currency in Africa and one of the weakest globally.
Surprisingly, numerous African currencies surpass the Naira, Nigeria’s official currency, despite Nigeria boasting the continent’s largest economy with the highest nominal GDP, a crucial factor in currency valuation. It’s noteworthy that the United States dollar (USD) sets the global standard for currency ranking, forming the basis for evaluating the strength or purchasing power of each currency.
Presented below, in ascending order, are the top 10 strongest currencies in Africa for the year 2023:
10.Egyptian Pound
Code: EGP Symbol = E£ 1 USD = 31.08 EGP
The Egyptian pound, symbolized as E£, holds the 10th position among Africa’s strongest currencies and serves as the official currency of the Arab Republic of Egypt.
Originally tied to precious metals, the Central Bank of Egypt initiated a managed float in 2001, transitioning to a full float in 2016. Preceding the float, the exchange rate was 8.8 Egyptian pounds to one dollar, later rising to approximately 15 Egyptian pounds per dollar.
The EGP’s adoption as an unofficial currency in Sudan and the Gaza Strip underscores its standing as one of Africa’s most robust currencies.
In response to the adverse effects of the 2020 COVID-19 lockdown measures, Egypt implemented interest rate reductions to stabilize the currency. Despite this, the country maintains one of the world’s highest real interest rates, facilitating treasury sales and currency protection while discouraging borrowing.
The Egyptian pound’s high value is further attributed to Egypt having the second-highest nominal gross domestic product on the African continent, trailing only behind Nigeria.
9.Zambian Kwacha
Code = ZMW Symbol = ZK 1 USD = 19.82 ZMW
The Zambian Kwacha (ZMW), the official legal tender issued by the Bank of Zambia, holds the 9th position among Africa’s strongest currencies.
While regarded as one of Africa’s robust currencies, the Zambian Kwacha sees limited activity among currency speculators due to its vulnerability to inflation and historical instability.
As Africa’s leading copper producer, Zambia’s currency experiences fluctuations tied to global copper market prices, contributing to its occasional unpredictability.
Introduced in 1968 following Zambia’s independence from the United Kingdom, the Kwacha replaced the pound.
Despite facing challenges such as a challenging-to-control inflation rate impacting many Zambians, the Zambian Kwacha remains one of Africa’s valuable currencies.
NB: Both the Namibian Dollar and the Lesotho Loti are more valuable than the Egyptian Pound and Zambian Kwacha at 18.52 to the dollar. However, the two currencies are pegged to the South African Rand. This mechanism maintains a steady exchange rate between the three nations and ensures that the cost of products remains the same across the three currencies regardless of the numerous economic events that may occur. While currency linking are not a factor for this ranking, both currencies were excluded since they are pegged to a continental rather than an intercontinental currency.
8.South African rand
Code = ZAR Symbol = R 1 USD = 18.51 ZAR
Introduced in February 1961, the South African Rand holds the 8th position among Africa’s highest currencies. Prior to the end of apartheid, it maintained a relatively stable exchange rate with the US dollar. However, its value has since depreciated, aligning with South Africa’s increased integration into the global economy.
The South African Rand’s strength is further underscored by several neighboring nations, including Lesotho, Namibia, and Swaziland, pegging their currencies to it. As the most traded legal tender in Africa and ranking among the top 20 globally, the South African Rand is arguably the continent’s strongest currency.
Initially linked to the price of gold, South Africa’s primary export, the Rand’s value remains susceptible to global uncertainties due to the country’s fragile economy and unstable political landscape. Despite these challenges, the South African Rand stands as a resilient and influential currency in Africa.
7.Eritrean Nakfa
Code = ERN Symbol = NFK 1 USD = 15 NFK
Occupying the 7th position among Africa’s highest currencies, the Eritrean Nakfa (NFK) serves as the official legal tender of Eritrea.
The Nakfa has maintained stability over the years, thanks to the Eritrean government’s deliberate choice of a fixed exchange rate system over a floating currency.
6.Seychellois Rupee
Code = SCR Symbol = SR 1 USD = 13.98 SCR
Ranked as the 6th highest currency in Africa, the Seychellois Rupee is also East Africa’s strongest currency, owing to Seychelles’ thriving market economy.
The country’s economic growth, fueled by foreign investment and the success of agriculture, fisheries, and small-scale industrial sectors, has facilitated the diversification of Seychelles’ gross domestic product.
The Seychellois Rupee’s robust position is further attributed to Seychelles boasting the largest GDP per capita in Africa. Additionally, the small nation’s independent monetary policy contributes to the high value of the Seychellois Rupee, making it one of the strongest currencies on the continent.
5.Botswana Pula
Code = BWP Symbol = P 1 USD = 13.17 BWP
The Botswana Pula (BWP) stands as the 5th highest currency in Africa and holds the distinction of being the strongest currency in Southern Africa. Introduced in 1976, eleven years following Botswana’s independence from British rule, the Pula has sustained its prominence.
Despite experiencing depreciation in 2005, the BWP maintains its status as one of Africa’s strongest currencies, with one Pula equating to 0.08 dollars. In Setswana, the predominant language in Botswana, “Pula” translates to rain, signifying a cherished gift given the country’s limited precipitation.
Fueled by Botswana’s resilient economy and stable democracy, the BWP remains one of Africa’s most valuable currencies. Its appeal is further heightened by being traded on Africa’s largest stock exchange, the Johannesburg Stock Exchange.
4.Ghanaian Cedi
Code = GHS Symbol = GH₵ 1 USD = 10.8 GHS
The Ghana Cedi (GHS), serving as the fourth official currency in the Republic of Ghana, holds the distinction of being the most valuable currency in both West Africa and sub-Saharan Africa. Ranking as the 4th highest currency on the continent, the GHS replaced the GHC in 2007 amid years of inflation-induced depreciation.
In 2020, the GHS earned recognition as the best-performing currency against the dollar worldwide, with a notable 3.9% increase, as reported by Bloomberg research. This achievement positioned the Ghanaian Cedi as one of the strongest currencies in Africa.
However, economic and financial statistics from the Central Bank (Bank of Ghana, BOG) in November 2022 revealed a 54.2% decline of the Ghanaian currency against the US dollar, marking it as the worst-performing currency globally during the initial eleven months of the year. This decline was steeper than the Sri Lankan rupee, which lost 45% of its value against the U.S. dollar.
The Russia-Ukraine conflict’s impact, leading to increased import costs and a subsequent outflow of foreign currency, contributed to this predicament. Despite facing challenges, Ghana’s government expenditure initiatives and employment development have played a role in maintaining the currency’s strength. Notably, the GHS is bolstered by Ghana’s position with the highest GDP per capita in West Africa.
3.Moroccan Dirham
Code = MAD Symbol = DH 1 USD = 10.21 MAD
The Dirham (MAD), the primary legal tender in Morocco, holds the position of the 3rd highest currency in Africa. Uniquely, it is not tradable outside the nation and exhibits virtual immunity to price swings influenced by banks.
In the Western Sahara region, the Moroccan dirham serves as the de facto medium of exchange. Despite lacking formal regulation, its export is legally prohibited.
Introduced on October 17, 1959, under the administration of Abdallah Ibrahim, the MAD replaced the Moroccan franc after the establishment of Bank Al-Maghrib. Since its inception, the Dirham has consistently stood as one of the strongest currencies in Africa.
2.Libyan Dinar
Code = LYD 1 USD = 4.77 LYD
At a rate of 4.77 Libyan Dinars (LYD) to the dollar, the Libyan dinar secures its position as the 2nd highest currency in Africa. Introduced in 1971 to replace the Libyan pound after Muammar Gaddafi’s coup d’état against King Idris, the LYD was initially minted at an equivalent value to the former currency.
Under the oversight of the Central Bank of Libya, responsible for production, issuance, and control, the currency operates with 1,000 dirhams per dinar. Despite maintaining its status as one of Africa’s strongest currencies, the LYD has experienced a gradual depreciation against major currencies such as the U.S. dollar, British pound, and euro over the years.
This decline is attributed to various factors, with the most significant being the drop in international oil prices. Given that oil sales constitute Libya’s primary income source, the diminishing global reliance on oil has notably impacted the dinar’s value.
1.Tunisian Dinar
Symbol = DT Code = TND 1 USD = 3.07 TND
With a conversion rate of 3.07 Dinars to the dollar in 2023, the Tunisian Dinar (TND) emerges as the highest currency in Africa. Launched in 1958, two years post-Tunisia’s independence from France and the era of the Tunisian franc, the TND’s ascension to the top position began.
Following the depreciation of the franc, the TND was pegged to the USD at a rate of 0.42 dinars to 1 dollar, a arrangement that persisted until 1971. Tunisia’s historically low inflation rate has played a pivotal role in propelling the TND to the forefront of African currency rankings. Notably, between 2000 and 2010, it exhibited less volatility than Egypt and Morocco, two neighboring economies reliant on oil.
To further solidify its status as Africa’s most valuable currency, the Tunisian government enacted laws rendering it illegal to import, export, or convert dinars into another currency.
Source: https://www.graphic.com.gh/features/opinion/top-10-strongest-currencies-in-africa-2023.html
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