What are the strongest currencies in the world?

Foreign currencies are traded in pairs, such as buying US Dollars with British Pounds. Consequently, one currency is always valued in relation to another, and this price is referred to as the exchange rate. The cost of products and services in a foreign currency is affected by exchange rates.

Most currencies are "floating," which means their value changes based on supply and demand. On the other hand, some currencies are "pegged," meaning their value is correlated to another currency.

When the US Dollar strengthens against the British Pound, American tourists can get more pounds for their dollars, increasing their buying power in US Dollars. However, visiting the United States has become more expensive for people from the United Kingdom because the Pound buys fewer dollars at that foreign currency exchange rate.

Therefore, as a forex trader, you can benefit from speculating on changes in the exchange rates of currencies without actually buying or selling (without owning) any particular currency.

Time of writing: June 2023

The Kuwaiti Dinar (KWD)

Kuwaiti Dinar (KWD) is the currency of  Kuwait, and 1 KWD equals 3.26 USD at the time of writing, making it the strongest currency from an exchange rate perspective.

Kuwait is a small nation between Saudi Arabia and Iraq. Kuwait is one of the world's wealthiest nations, with massive oil reserves and major oil exports. Furthermore, Kuwait is a tax-free country with a low unemployment rate. 

The Bahraini Dinar (BHD)

Bahrain's national currency is the Bahraini Dinar (BHD), which is notable for its oil exports rather than its small size. 1 BHD equals 2.65 USD at the time of writing. The Kingdom of Bahrain is a Persian Gulf island nation. The country's income is derived from the oil and gas sector, which accounts for more than 85% of total revenue. The Bahraini dinar was created in 1965 to replace the Gulf Rupee, and it is now tied to the US dollar.

The Omani Rial (OMR)

The Omani Rial (OMR) was originally adopted as Oman's national currency in 1970 and has since been tied to the US dollar. 1 OMR equals 2.60 USD at the time of writing.

Oman is located on the Arabian Peninsula and has a strong economy based on oil exports to other countries. However, tourism and agriculture also contribute to the country's revenue.

The Jordanian Dinar (JOD)

Jordan's national currency has been the Jordanian Dinar (JOD) since 1950. 1 JOD equals 1.41 USD at the time of writing. Jordan, unlike the other nations listed, does not have oil. Nonetheless, the Jordanian dinar is strong due to the country's diverse economy, which includes everything from trade and finance to manufacturing and mining.

The Cayman Islands Dollar (KYD)

The Cayman Islands Dollar (KYD) is Cayman Island's official currency, and 1 KYD equals 1.20 USD at the time of writing. The Cayman Islands are recognised as a 'tax heaven' because they provide financial firms and rich people with offshore banking services. The Cayman Islands dollar was launched in 1970 and is linked to the US dollar. 

The Pound Sterling (GBP)

The Pound Sterling (GBP) is the official currency of the United Kingdom. 1 GBP equals 1.25 USD at the time of writing. It is the oldest currency and one of the most powerful in worldwide commerce and finance. It is included in the basket of IMF Special Drawing Rights.

The Swiss Franc (CHF)

The Swiss Franc (CHF) is the official currency of Switzerland and Liechtenstein, two of the world's richest nations. 1 CHF equals 1.11 USD at the time of writing. The Swiss Franc is recognised as a safe haven currency because of the country's strong economy, tightest monetary policy, and lowest interest rates. Switzerland's banknotes are the only ones with a vertical design worldwide.

The Euro (EUR)

The Euro (EUR) is the official currency of 19 nations in the European Union. 1 EUR equals 1.08 USD at the time of writing. The Euro is the second most widely used currency in reserve and circulation. Although the Euro is not tied to any other currency, many countries have tied their national currencies to the Euro.

The US Dollar. (USD)

The United States of America uses the US Dollar as its official currency. The US Dollar has become the world's most widely used and traded currency. The US Dollar is known as the 'World Reserve Currency.' It's also called the petrodollar because of the OPEC and the USA agreement for selling oil against USD.

The Canadian Dollar (CAD)

The Canadian Dollar is the country's official currency, and 1 CAD equals 0.78 USD at the time of writing. Because Canada is linked to the United States through trade, the Canadian Dollar fluctuates significantly with the value of the US dollar. Canada's second-largest crude oil supply is another major factor for CAD's strength. As a result, volatility in global oil prices affects the Canadian Dollar.

The monetary policies of central banks and the quality of management overseeing the institutions in place determine whether a currency rises or falls. To summarise, the variables that increase a currency's value include political stability, economic stability, low inflation, high-interest rates, good monetary policies, and cheap pricing to attract nations with more buying power.
A well-developed economy fosters low unemployment and a favourable position in the banking and exchange market for currency trading.