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You have surely heard of the US dollar, the euro, and the British pound – they are the strongest and most popular currencies globally. But there are many more examples of national currencies that boast high performance and stability. In this blog post, we will talk about the top 10 most stable currencies in the world and analyse how they became so important.

What Makes a Currency Stable?

A currency is considered stable when it maintains its unit of account and purchasing power over a long period of time. These currencies have smaller fluctuations in their exchange rates than most currencies.

The strength of a currency is influenced by many local and global factors, including supply and demand in forex markets, central bank interest rates, inflation rates, economic growth, and trade balance. Even the most stable currencies in the world are vulnerable to these factors.

A robust economy is often associated with a stable currency. Countries with high economic growth, low unemployment and inflation rates, and political stability tend to have more stable currencies. However, even the most stable economies suffer in periods of global turbulence, which can be caused by wars and economic crises. To stabilise exchange rates, central banks use various monetary policy instruments.

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10 Most Stable Currencies in the World

The vast majority of traders and investors choose which currencies to trade based on their risk/reward ratio. Although they look for different investment opportunities – either safe assets with low returns or risky assets with potentially higher returns – all of them want to know the most stable assets to balance their portfolios in periods of high market volatility.

So, let’s first look at the most secure currency: the Swiss Franc.

Swiss Franc (CHF)

The Swiss franc is the first of the world’s top three safest currencies. It is the currency of Switzerland. Switzerland has one of the highest GDP levels per capita in the world, with a strong emphasis on the services sector (about 74% of Swiss GDP). European countries account for almost 50% of the country’s exports by value.

Switzerland has a low level of public debt, the lowest VAT rate in Europe, and a highly developed banking system. Even though inflation rates hit a 29-year high of 3.5% in 2022, this level was much lower than that of comparable economies, including the UK, EU, and US. Thanks to the strong economy, the Swiss franc has become one of the most stable currencies in the world and is on the list of the world’s safe-haven assets.

Japanese Yen (JPY)

The Japanese yen ranks second in our list of the most stable currencies in 2023. Despite having the highest national debt globally, Japan has been able to maintain a low inflation rate for a long time. According to the International Monetary Fund, Japan’s private debt, loans, and debt securities exceed 187% of GDP.

The Japanese yen is the third most actively traded currency in the foreign exchange market, behind only the US dollar and the euro. According to Madison Trust Company, Japan ranks eighth among the top ten countries with the largest gold reserves in the world.

United States Dollar (USD)

Many countries, including the US, Ecuador, El Salvador, Marshall Islands, and Panama,  use the US dollar as either their official or de facto currency. It’s also widely used all around the world and serves as a reserve currency. The US dollar has been considered the world’s most stable currency for many years.

However, many analysts doubt that the US dollar is a reserve currency. The US has a huge national debt – $31.7 trillion as of April 28, 2023. Last year, Government Debt to GDP amounted to 129%. Over the last few years, the Federal Reserve has tried to beat the increasing inflation rate by raising the interest rate. Its measures have helped to manage increasing prices and ensure economic stability while pushing the value of USD up.

British Pound Sterling (GBP)

The British pound sterling is the domestic currency of the UK and nine of its associated territories. The British pound is not the strongest currency in the world, but it is still among the most stable currencies on Earth. The economy of the UK is highly advanced, with London being the largest tech hub globally.

For many years, the UK GDP has been showing a stable uptrend, and even after the pandemic, the country has managed to maintain this. Sectors such as services, manufacturing, construction, and tourism contribute most to the country’s GDP. Although the UK is fighting high inflation and the Bank of England keeps raising interest rates, GBP remains one of the most stable currencies.

Norwegian Krone (NOK)

The Norwegian krone is not an expensive currency, yet it has been shown that it can be one of the most stable ones. Norway is one of the very few countries in the world that has no net debt and boasts a large sovereign wealth fund.

For half a century, the annual average inflation rate in Norway has been 4.5%. This isn’t a small figure, but the growth in prices is stable and slow. The most important elements that form the country’s GDP are large mineral reserves, hydropower, fishing, and the developed shipping industry. Since the production of oil and gas accounts for about 20% of Norway’s economy, the value of the currency is highly vulnerable to changes in the price of natural resources.

Australian Dollar (AUD)

Australia’s national currency, the Australian dollar, is also a legal tender in the Christmas Islands, the Cocos Islands, the Norfolk Islands, and some independent Pacific States. It’s one of the most stable currencies globally. The strength of the Australian dollar is based on a stable system of government and a relatively low unemployment rate. The Reserve Bank of Australia is a key player in maintaining stability, as it monitors the supply of money and the printing of new bills.

The Australian dollar is often referred to as a “commodity currency”, as Australia is a major supplier of raw materials, agricultural products, coal, and natural gas. Resources account for 67.4% of the country’s GDP. AUD’s value is mainly affected by changes in risk sentiment and exports, making AUD interesting to trade.

Canadian Dollar (CAD)

The Canadian dollar or the CAD is the national currency of Canada. In forex, the CAD is traded mostly against the US dollar, euro, and Japanese yen. Similar to the Australian dollar, the Canadian dollar is a commodity currency because the country has large reserves of natural resources.

Canada’s economy is diversified and highly developed. A large portion of Canada’s GDP, 45%, comes from international trade; its main trading partners are the US, China, and the UK. According to CEIC Data, in 2022, general government net debt reached 71.3% of the country’s GDP, which is not that high compared to the US.

Euro (EUR)

The euro is used across the Eurozone. This currency holds second place as the world reserve currency. Although the euro is prone to fluctuations, the amount of gold reserves in the EU zone makes it stable.

The European Union has four main sectors of economic output that influence GDP – services, industry, construction, and agriculture. EU inflation reached an all-time high of 11.50% in October of 2022, with an average of 2.33% between 2000 and 2023, but the euro kept its position as one of the most stable currencies. The ECB takes measures to preserve the purchasing power of the single European currency.

Danish Krone (DKK)

The Danish krone is Denmark’s local currency. Even though this country is a member of the EU, it has not adopted the euro and has preserved its national currency. Thanks to the well-organised monetary policies implemented by the Danish central bank, the krone is gaining the status of a stable currency.

In 2023, the inflation rate hit its all-time high of 6.7% compared to a stable average rate of 1.71% between 2001 and 2022. The main sectors influencing the GDP of Denmark are services (75.2%) and construction (7.7%) as of April 2023. The gross domestic product is forecast to grow continuously between 2023 and 2028.

Singapore Dollar (SGD)

The Singapore Dollar has one of the highest-valued currencies in the Asia-Pacific region. The Republic of Singapore strives to maintain the stability of its currency. The Monetary Authority of Singapore monitors international exchange rates and intervenes if necessary.

The top industries that power Singapore’s economy are pharmaceuticals and biotechnology, professional services, energy, and chemicals. The inflation rate in Singapore hit a 14-year high of 5.5% in 2022, which heavily influenced the value of the country’s currency. However, the central bank takes measures to keep SGD stable.

Key Takeaways

The economies of numerous countries are undergoing rapid changes as a result of political news and economic policies. Eventually, the ranking order of the highest currencies will also change. In this post, we’ve gathered the safest and most stable currencies based on data for 2022-2023. If you plan to trade the currencies on our list, pay attention to any relevant news.

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FAQs

What is the most stable currency in the world?

As of April 2023, the most stable currency globally is the Swiss franc, thanks to the strong economy of Switzerland and its stable political environment.

Which is the safest currency in the world?

Backed by a powerful economy and the highly developed banking system of Switzerland, the Swiss franc is the safest currency in 2023.

Which are the 10 most powerful currencies in the world?

The most powerful currencies are not the same as the most stable ones. For example, the Kuwaiti dinar is now one of the most expensive currencies thanks to Kuwait's strong economy. The dinar is followed by the Bahraini dinar, the Omani rial, and the Jordanian dinar. Check out the whole list here.

Which currency is the weakest in the world?

The Iranian rial is the cheapest currency in the world right now. It is followed by the Venezuelan sovereign bolivar and the Vietnamese dong. You can learn more about the most worthless currencies here.

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