The 6 most undervalued currencies in the world against the dollar
4 min read
Even with war and economic crisis, The dollar has fallen in the last week. On Monday (25), the US currency was about 4.79 Brazilian reals for sale.
The US dollar is used as a reference for transactions around the world and the importance of this currency is due to several reasons. First, because the United States is a country of reliable debtors with a strong economy. In addition, the dollar is considered a stable currency, which is not usually subjected to sharp and unexpected drops.
But do you know what are the most declining currencies in the world against the dollar?
A survey by “Econometrica”, which compares currencies from 25 countries, showed that the Turkish lira is the most undervalued currency in the world, followed by the currencies of Argentina and Chile (pesos). The Brazilian real occupies the twelfth place in the list.
Turkish lira
Turkish lira banknotes
Photo: Murat Sezer/Reuters
Turkey saw its currency depreciate in 2021, with the dollar gaining more than 37% against the lira. Currently, one lira is valued at only 0.067 US dollars.
Turkish President Recep Tayyip Erdogan’s interference in the country’s monetary policy is cited as one of the main causes of the currency crisis. The order issued by the Central Bank of Turkey is to cut interest rates, prioritizing credit and exports, while leaving aside currency stability.
This devaluation of the currency made the Turkish population feel right in their pocket, with inflation in the country reaching its highest levels.
Argentine peso
Against the dollar, the Argentine peso was the second-lowest currency in the world in 2021
Photo: Enrique Markarian
The Argentine peso was the second most declining currency in the world in 2021, with the dollar gaining more than 20%. Today, one Argentine peso is equal to only 0.0090 US dollars.
Argentina’s currency crisis is the result of a $45 billion debt with the International Monetary Fund (IMF) under former President Mauricio Macri. The debt is even greater than the full size of Argentina’s foreign exchange reserves, which are $39.2 billion.
Chilean Peso
At the end of 2021, with the election of the new president, Gabriel Borek, the Chilean peso suffered its largest devaluation since 2008.
Photo: reproduction
Year after year, the Chilean peso suffered a constant devaluation. At the end of 2021, with the election of the new president, Gabriel Borek, the currency suffered its largest decline since 2008. Today, 1 Chilean peso is equivalent to 0.0013 US dollars.
Despite this, the coin entered 2022 with a boost. The peso is piling up nearly 43% against the riyal since the beginning of last year. This year alone, the increase was 4.6%.
Colombian Peso
Currently, 1 Colombian Peso is only equal to 0.00026 US dollars
Photo: reproduction
Political and economic uncertainty in Colombia, with violent popular rejection of the tax reform package and loss of investment grade, made the Colombian peso one of the most undervalued currencies in the world in 2021.
Currently, one Colombian peso is equal to 0.00026 US dollars.
Japanese Yen
Currently, the Japanese Yen is equal to 0.0081 USD
Photo: iStock
The consequences of the war in Ukraine and the expectations of the Federal Reserve (the Federal Reserve, the US central bank) to raise interest rates due to inflation, provoked the Asian markets.
This caused the value of the Japanese yen to fall near its lowest level, which has not happened since 1972.
Currently, the Japanese yen is equal to 0.0081 US dollars.
Although the Bank of Japan, the country’s monetary authority, argues that a weak yen benefits the country’s economy, Energy The purchasing power of Japanese households is declining and this may make imported goods more expensive for consumers in the country.
Brazilian Real
The dollar is falling against the riyal. The Brazilian currency ranks 12th on the list
Photo: Getty Images
The dollar is experiencing a moment of high volatility, amid a scenario of financial and political concerns. In 2021, the US currency reached R$5.79 (nominal maximum), but it also reached R$4.90.
Today, 1 riyal is equal to 0.21 US dollars.
According to the survey economicsBrazil is the country where the dollar has so far lost the most value in 2022. Since the beginning of the year, losses have accumulated by 6.63% in relation to the Brazilian currency.
Brazil started the year with high inflation and a sharp fall in people’s incomes. Experts attribute this to the stock market and interest rates. There is a movement of foreign investors taking money from technology stocks, which suffer from a higher interest rate scenario in the US, and investing in commodities, a sector in which Brazil stands out.
In addition, Brazil has the highest real interest rate in the world, which attracts foreign resources.
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