9 currencies that are stronger than the U.S. dollar & what Kenya can learn from them

Understanding how currency values are determined, particularly against the mighty US dollar, requires a deep dive into economic principles, global markets, and geopolitical influences.

As of March 2024, we delve into the notable currencies that have outpaced the US dollar and explore the complex factors influencing currency values, according to Forbes.

1. Kuwaiti Dinar (KWD)

Leading the pack is the Kuwaiti Dinar, holding the title of the world's strongest currency. With 1 Kuwaiti Dinar buying 3.25 US dollars, Kuwait's wealth, largely derived from global oil exports, positions its currency as a formidable player on the international stage.

One Kuwaiti Dinar is equivalent to Sh495 or $3.25

Kuwaiti Dinar Kuwaiti Dinar Pulse Live Kenya

The Dinar's history, initially pegged to the British pound and later to an undisclosed basket of currencies, adds layers to its financial resilience.

2. Bahraini Dinar (BHD)

Following closely is the Bahraini Dinar, the second-strongest currency globally.

Pegged to the US dollar, Bahrain, much like Kuwait, thrives on oil and gas exports.

Bahraini Dinar Pulse Live Kenya

The island nation's economic prowess is mirrored in its currency's strength, with 1 Bahraini Dinar buying 2.65 US dollars.

One Bahraini Dinar is equivalent to Sh360.

READ: Top 10 African countries with the strongest currency exchange rates in 2023

3. Omani Rial (OMR)

Occupying the third spot is the Omani Rial, showcasing the economic might of Oman, situated strategically at the tip of the Arabian Peninsula.

Pegged to the US dollar, 1 Omani Rial commands 2.60 US dollars, reflecting the country's significant role as a major oil and gas exporter.

Omani Rial Pulse Ghana

One Omani Rial equals Sh353

4. Jordanian Dinar (JOD)

The Jordanian Dinar claims the fourth position globally, pegged to the US dollar.

Jordan, a largely land-locked country in the Middle East, grapples with economic challenges but maintains a robust currency.

Jordanian Dinar Pulse Ghana

With 1 Jordanian Dinar buying 1.41 US dollars, Jordan's economic landscape adds an intriguing layer to the global currency dynamics. One Jordanian Dinar equals Sh192

5. British Pound (GBP) and Gibraltar Pound (GIP)

Sharing the fifth position are the British Pound (GBP) and the Gibraltar Pound (GIP).

The British Pound, free-floating and not pegged to other currencies, reflects the economic might of the United Kingdom.

1 Pound sterling equals Sh173 or $1.27

Pounds Sterling ece-auto-gen

Gibraltar, officially a British territory, pegs its currency at par with the British Pound. Both currencies stand strong with 1 GIP buying 1.24 US dollars or Sh173.

7. Cayman Islands Dollar (KYD)

The Cayman Islands Dollar secures the seventh spot as the strongest currency globally, pegged to the US dollar.

This British territory in the Caribbean, known for its offshore financial center, showcases economic resilience with 1 Cayman Islands Dollar buying 1.20 US dollars.

One Cayman Islands Dollar equals Sh163

Cayman Islands Dollar Cayman Islands Dollar Pulse Live Kenya

8. Swiss Franc (CHF)

Switzerland's official legal tender, the Swiss Franc, claims the eighth position globally.

Renowned for its political stability, Switzerland pegs its currency against the US dollar.

Swiss Franc Pulse Ghana

With 1 Swiss Franc buying 1.13 US dollars, it stands as a safe haven in turbulent economic times.

One Swiss Franc equals Sh153.

READ: Top 10 African countries with the weakest currency exchange rates in 2023

9. Euro (EUR)

The Euro secures the ninth position globally, representing the Eurozone.

Introduced in 2002 and free-floating, the Euro stands strong against the US dollar with 1 Euro buying 1.09 US dollars.

One Euro equals Sh147.

Euro paper money and coinsGetty Images Business Insider USA

10. US Dollar (USD)

Remarkably, the US dollar itself secures the tenth position, underlining its dominance in global finance.

As the world's most-traded currency, the US dollar is the largest reserve currency, influencing commodity pricing worldwide.

One United States Dollar equals Sh135.

A staff member counts US dollar cash at a bank in Hai 'an, Jiangsu Province, China, Sept 5, 2022.CFOTO/Future Publishing/Getty Images Business Insider USA

The economic success of countries with currencies stronger than the US dollar offers valuable lessons for Kenya.

By embracing diversification, strategic currency policies, political stability, regional cooperation, and economic resilience, Kenya can chart a path toward sustainable growth and navigate the complexities of the global economic landscape.

Learning from these examples and tailoring strategies to Kenya's unique context can pave the way for a more prosperous and resilient future.

Factors that influence value of currency

1. Supply and Demand

At the core of currency valuation lies the fundamental principle of supply and demand. If a country's exports outweigh its imports, there is an increased demand for its currency.

Conversely, a trade deficit can lead to a decrease in currency value. It's a delicate balance influenced by factors such as trade policies, economic health, and consumer preferences.

2. Interest Rates

Central banks play a pivotal role in shaping currency values through the manipulation of interest rates. Higher interest rates attract foreign investors seeking better returns on investments denominated in that currency. As interest rates rise, so does the currency's value. Conversely, lower interest rates can lead to depreciation.

3. Economic Indicators

A nation's economic health is reflected in various indicators, such as GDP growth, employment rates, and manufacturing output. Positive economic data can bolster investor confidence, leading to increased demand for the currency and subsequent appreciation.

4. Political Stability

Investors seek stable environments for their capital. Countries with political stability and effective governance often experience a stronger currency value. Political uncertainty, on the other hand, can lead to depreciation as investors seek safer havens for their funds.

5. Inflation Rates

Inflation erodes the purchasing power of a currency. Countries with lower inflation rates often see appreciation in their currency value. Central banks employ monetary policies to manage inflation, thereby influencing the exchange rates.

6. Speculation and Market Sentiment

The foreign exchange market is highly influenced by speculation and market sentiment. Traders analyze economic data, geopolitical events, and global trends to predict currency movements. Public perception can create a self-fulfilling prophecy, impacting currency values.

7. Geopolitical Factors

Global events, such as trade tensions, geopolitical conflicts, or natural disasters, can significantly impact currency values. Uncertainty leads to volatility, influencing investor behavior and currency movements.