When people ask What is Forex Trading? Experts would most likely state that this is a market where currencies are mostly sold and bought either for business or personal use. If you are into trading, you are certainly familiar with the fact that currency rates fluctuate in the market every single day. Thus, having an idea on the strongest and weakest currencies will help you create a better trading plan and strategy towards having a favorable position, thereby making you profit better.
Weakest Currency in the World
1.Cambodian Riel
This is the official currency of Cambodia. In the forex industry, a Cambodian riel is traded at about 4,000 riel to the US dollar. At present, Cambodia is currently under a de-dollarization campaign so this means that small US dollar denominations are removed from the financial circulation. Tourists or travelers can however use dollars instead of Cambodian Riel when they financially transact but if you wish to have riels on hand, then you can go to any bank and have your dollars changed. Experts however explain that higher rates are given by local markets.
2. Paraguayan Guarani
This currency has a very long story to explain why it is considered one of the weakest currencies in the world. Back in 1943, the Paraguayan government authorized the use of Guarani instead of peso as a legal tender. During that time, 1 Guarani was equivalent to 100 pesos. This action was done to lessen the effect of severe inflation which was experienced by the republic. After more than a decade, the problem still existed so they decided to oeg one dollar to every 126 Guranies from 1960 up to 1985. This still did not resolve the problem. Instead, this issue gave birth to the creation of 50,000 guarani notes and 10,000 100,000 Guarantees. Up to this time, Guarani continues to decline sharply having 7,000 Guarantees to 1 USD.
3. Laotian Kip
One interesting feature of the Lao kip is that it freely floats against other currencies and is not pegged to any currency. For travelers, they can bring a maximum of $2,000 in U.S. currency without declaring but they can never import kip. If by chance you wish to bring more than two thousand dollars, you have to declare the amount to customs before and after arriving in Cambodia. Due to Cambodia’s high inflation rate, lower denominations for kip are no longer accepted.
4. Guinean Franc
The Guinean Republic used to be called French Guinea, that is why their currency is basically franc. Despite Guinea’s rich resources for minerals, gold, high-grade iron ore, and diamonds, they have a GDP of $12.3 billion and they are faced with issues of political instability and Ebola Virus. Nowadays, their economy is getting better and more improved but the exchange rate for 1 Guinean franc to USD is just USD 0.00010.
Conclusion:
With our listed data, we can discover a concept on the role of weak currencies towards the explanation of “What is Forex Trading? ” Similar to other assets, currencies are also affectes by the law of supply and demand. We can therefore say that a currency with increased demand in the economy and trading industry is expensive while the rest that aren’t needed that much are ratedat a cheaper price.