Currencies are the backbone of the global economy, providing a means of exchange and facilitating international trade. Some currencies, however, are considered stronger and more valuable than others, which makes them particularly attractive to investors and traders. These are the top ten most valuable currencies in the world in 2023, based on their exchange rates against the US dollar. 

How is foreign currency priced?

Foreign currency is priced based on its exchange rate, which represents the value of one currency in terms of another currency. Exchange rates are determined by the supply and demand of each currency in the foreign exchange market. The value of a currency can fluctuate based on a variety of factors, including economic conditions, political events, and changes in interest rates.

In general, when a currency is in high demand, its value will increase relative to other currencies, and when it is in low demand, its value will decrease. For example, if there is a high demand for U.S. dollars, its exchange rate will likely rise compared to other currencies, and vice versa.

Exchange rates can be quoted in two different ways: as a direct or an indirect quote. In a direct quotation, the foreign currency is the base currency; while in an indirect quote, the domestic currency is the base currency. For example, in Bangladesh, the exchange rate between the U.S. dollar and BDT is 107.52. This means that 1 U.S. dollar can be exchanged for BDT 107.52 (direct quote) or BDT 1 can be exchanged for 0.0093 U.S. dollars (indirect quote).

Foreign currency can be purchased and sold in the foreign exchange market through banks, brokers, or online platforms. The exchange rate at the time of the transaction will determine the cost or value of the currency being exchanged.

Read More: How to Identify Fake Currency Notes in Bangladesh

Which are the Top 10 Strongest Currencies in 2023?

Whether you are a seasoned investor or simply curious about the global financial landscape, the world's 10 strongest currencies will provide you with valuable insight.

Kuwaiti Dinar

The Kuwaiti Dinar (KWD) is considered the strongest currency in the world with a value of 1 KWD equaling 3.26 USD and 347.65 BDT. The KWD is unpegged, allowing it to move freely, and is supported by Kuwait's sizable sovereign wealth fund managed by the Kuwait Investment Authority.

The economy of Kuwait is heavily dependent on oil and gas exports, making it vulnerable to fluctuations in global crude oil prices. However, the KIA has drawn up a plan to counter this and ensure the value of the KWD remains strong and stable.

Read More: How to safely send remittance to Bangladesh?

Bahraini Dinar

The Bahraini Dinar (BHD) is among the most valuable currencies in the world, with 1 BHD equaling 2.65 USD and 282.49 BDT. Despite the detrimental effects of low oil prices on Bahrain's economy, the BHD has remained relatively stable since 2011.

Read More: Explainer: What it means to let taka float

Bahrain's low and stable inflation rate has strengthened the economy and helped maintain the value of the BHD. The country has also implemented policies to promote foreign investment and diversify its economy beyond oil and gas.

Omani Rial

The Omani Rial (OMR) is one of the highest currencies in the world, with 1 OMR equaling 2.60 USD and 278.48 BDT. Oman's traditionally rigorous monetary policy and financial restrictions have helped maintain the value of the OMR against the USD.

Read more: What are the 3 reasons behind Bangladesh's falling forex reserves

The country's lending restrictions favor offshore enterprises and Forex trading initiatives with a high-risk appetite. Oman is also investing in renewable energy and tourism to diversify its economy and reduce dependence on oil exports.

Jordanian Dinar

The Jordanian Dinar (JOD) has a higher value than the USD, with 1 JOD equaling 1.41 USD and 150.09 BDT. Jordan pegged its currency to the USD in 1995 to attract American investments. To sustain the peg, the JOD must maintain its value in relation to the USD.

Read More: Digital Currency: Benefits and Risks of the Cashless Economy in Bangladesh

Jordan has successfully done so in the first two decades of the 21st century. The country has implemented economic reforms to reduce its budget deficit, attract foreign investment, and promote economic growth.

British Pound

The British Pound (GBP) is another strong currency, with 1 GBP equaling 1.26302 USD. The Bank of England plays a crucial role in determining the value of the GBP, but inflation, economic growth, and forex market sentiment also influence its value.

Read More: Bangladesh's economy to reach $1 trillion by 2040

The UK's stable economy and leading position in global affairs make it attractive to foreign investors, but political and economic events can also affect the value of the GBP.

Cayman Islands Dollar

The Cayman Islands dollar (KYD) is ranked 6th among the world's strongest currencies, with 1 KYD being equivalent to 1.20 USD and 127.84 BDT. However, maintaining this currency peg can be difficult during unfavorable economic conditions and when the US raises interest rates. The value of the Cayman Islands dollar is also bolstered by the country's status as a tax haven.

Read More: BB lets dealers to open foreign currency deposit accounts.

Euro

The Euro (EUR) is the second most traded currency globally and is considered to be among the most stable currencies. The European Central Bank (ECB) responsible for the entire continent's monetary policy has more independence from national governments, making the Euro stronger.

Read More: Kim Kardashian fined $1 million over crypto currency promotion

However, this independence also led to issues during the European sovereign debt crisis, prohibiting some countries from taking specific actions to stimulate their economies. The value of the Euro is determined by the economic, social, and political status of all nineteen countries that use it. 1 EUR equals 1.12 USD and 119.38 BDT.

Swiss Franc

The Swiss Franc (CHF) is Switzerland's official currency and is ranked 8th among the world's strongest currencies. It rose in value due to the European debt crisis and US monetary policy, and its peg to the Euro was lifted in 2015.

Read More: HSBC introduces domestic foreign currency transaction through RTGS

The Swiss Franc is widely considered the most secure source of the foreign exchange market and is a safe bet for currency pairs. 1 CHF equals 1.11 USD and 118.66 BDT.

US Dollar

The US Dollar (USD) is the world's most traded currency and the largest reserve currency. It is the benchmark in the international market when it comes to currency exchange rate and conversion rate. The USD is a cornerstone of the global economy and a world reserve currency for international trade and finance. Its value is influenced by market psychology, geopolitical risk, fundamentals, and technical variables. 1 USD equals 106.49 BDT.

Read More: Can You Travel Abroad Without Buying US Dollars?

Canadian Dollar

The Canadian Dollar (CAD) is the world's sixth most traded currency and is vulnerable to fluctuations in the value of the US dollar. Canada's massive global oil reserves and second-largest uranium supply contribute to its natural resources ranking third in the world. 1 CAD equals 0.74 USD and 79.01 BDT.

Read More: Currency depreciations risk intensifying global food, energy crisis: World Bank

Conclusion

The global economy is influenced by a multitude of factors, ranging from political events to local economic conditions. Currencies play a vital role in this complex system, and the strength of a currency can be a significant indicator of the economic health of a nation. 

Read More: Govt keen to expand digital banking, examine if digital currency could be launched

In this article, we have explored the top ten most valuable currencies in the world, each with its unique set of factors contributing to its strength. Whether it's the natural resources of Canada, the stability of the Swiss financial system, or the Eurozone's economic policies, the reasons for a currency's strength can be complex and multifaceted. 

However, by understanding the factors behind these currencies' strength, investors and traders can make more informed decisions and navigate the global financial landscape with greater confidence.