US dollar drops to 10th strongest currency worldwide, as naira gains N95 against USD in one week

The US dollar is popularly seen as the most powerful currency in the world and the most-traded currency on the global market by margin.

However, the US greenback is not the strongest globally and remains the most traded by margin.

The Middle East houses some of the world’s best currencies based on their performance against the dollar.

According to Forbes, foreign currencies are traded in pairs, so the money is always priced relative to another currency, known as the exchange rate.

Most currencies are floating, like the Nigerian currency, meaning their value fluctuates depending on demand and supply.

Some currencies are pegged; that is, their value depends on the importance of another, primarily the US dollar, which is fixed on an agreed rate.

Exchange rates affect the cost of goods and services in a foreign currency. The development means that if the naira weakens against the US dollar, the prices of goods and services would cost more in naira terms.

On June 14, 2023, the Nigerian government announced the free float of the country’s currency, the naira, leading to a massive fall in value.

Analysts say the naira has lost almost 80% of its value against the US dollar between June and August.

The country’s financial regulator, the Central Bank of Nigeria (CBN), collapsed all the multiple exchange rate markets into the Investors and Exports (I&E) window.

The policy aims to unify the nation’s multiple exchange markets.

Economic analysts say the move has proved counterproductive as the parallel market drifted farther away from the official window, creating an imbalance in the markets.

Recently, the Chartered Institute of Bankers of Nigeria (CIBN) also said the move by the apex bank could be more productive as the gap between the parallel market and the official rate has grown by N200.

However, in a twist of events, the Nigerian currency began to make a surprise comeback against the dollar after CBN promised to intervene. It gained about N95 in five days, leading to a massive loss to FX speculators.

Here are the top 10 strongest currencies

Kuwaiti dinar – 1 KWD/$3.26

Bahraini dinar – 1 BHD/$2.66

Omani rial – 1 OMR/$2.60

Jordanian dinar – 1 JOD/$1.41

British pound – 1 GBP/$1.28

Gibraltar pound – 1 GIP/$1

Cayman Islands dollar – KYD/$1.20

Swiss franc – 1 CHF/$1.15

Euro – 1 EUR/$1.10

US dollar -USD

Forbes report says the US dollar is the 10th strongest currency in the world, worth exactly one against itself. All other currency units across the globe are worth less than a dollar.