Which Are the Strongest Currencies in Asia in 2024?

Currency strength is an important indicator of a nation’s economic prowess and stability. A strong currency not only reflects the robustness of a country’s economy, but also influences its trade balance, inflation rates, and overall competitiveness in the international market.

Several factors contribute to the strength of a currency. One significant aspect is a nation’s economic stability, including low inflation rates, sustainable growth, and manageable levels of public debt. Additionally, a country with strong fiscal policies and a stable political environment tends to have a currency that holds its value well against others.

Did you know that, contrary to what many believe, the Singaporean dollar is not the strongest currency in Asia; it is the Kuwaiti Dinar? One Kuwaiti dinar is capable of buying around $3.26 US dollars, but how are currencies compared to each other? Let us find out the top ten currencies in Asia and the reasons why they top the charts. 

What Determines the Strength of a Currency?

A currency’s strength can be influenced by internal and external factors such as interest rates, trade balances, and investor confidence. Countries with high-interest rates often attract foreign investment, thereby increasing demand for their currency. Similarly, a positive trade balance, where exports outweigh imports, can bolster a currency’s value by increasing demand for it in international markets.

When considering the strongest currencies in Asia, Japan’s yen and Singapore’s dollar stand out prominently. The Japanese yen, known for its stability and liquidity, is one of the most traded currencies globally. Japan’s strong industrial base, technological advancements, and prudent fiscal policies contribute to the yen’s strength despite the country’s aging population and deflationary pressures.

On the other hand, Singapore’s dollar, often referred to as the SGD or simply the “Singdollar,” is renowned for its stability and reliability. Singapore’s robust financial sector, sound economic fundamentals, and strategic geographical location as a trading hub in Southeast Asia underpin the strength of its currency. Additionally, Singapore’s government maintains strict fiscal discipline and prudent monetary policies, further enhancing the Singdollar’s status as one of Asia’s strongest currencies.

Let’s explore each of these currencies in detail in the next sections. 

Top 10 Strongest Currencies in Asia

If you are wondering how certain countries were able to diversify their economies and become the best currencies in Asia, here are all your answers. 

1. Kuwaiti Dinar

The Kuwaiti Dinar holds strong against the US dollar, currently trading at around $3.26 USD per Kuwaiti Dinar. This strength is largely due to Kuwait’s vast oil reserves, which continue to be a dominant export. While oil and petroleum products remain king, Kuwait also exports chemicals, fertilizers, and some manufactured goods. 

Historically, the Kuwaiti Dinar has been one of the highest-valued currencies globally. Its journey to prominence began with the discovery of oil reserves in the 1930s, which transformed Kuwait into a wealthy nation. In 1961, Kuwait gained independence from British colonial rule, and in 1967, the Kuwaiti Dinar was introduced to replace the Gulf Rupee. 

Here are some reasons for the strength of the currency. 

• Abundant Oil Reserves: Kuwait boasts significant oil reserves, making it one of the world’s leading oil exporters. Oil revenues contribute substantially to the country’s economy, providing a stable source of income and foreign exchange reserves. This abundance of natural resources bolsters investor confidence in the Kuwaiti economy, thereby supporting the strength of its currency.
• Pegged to a Basket of Currencies: The Kuwaiti Dinar is pegged to a basket of currencies, primarily consisting of the US dollar. This pegging arrangement provides stability to the Dinar’s exchange rate and ensures that it remains resilient against fluctuations in international currency markets.
• Sound Fiscal Policies: Kuwait has implemented prudent fiscal policies over the years, including responsible budget management and the establishment of sovereign wealth funds. These measures help maintain fiscal stability and prevent excessive inflation, which can erode the value of the currency.

2. Bahraini Dinar (BHD):

Similar to the Kuwaiti Dinar, the Bahraini Dinar sits pretty at an exchange rate of roughly $2.65 USD per Bahraini Dinar. Although oil is a major contributor to Bahrain’s economy, they’re actively diversifying with a focus on financial services, tourism, and even aluminum production.

Historically, the Bahraini Dinar was introduced in 1965, replacing the Gulf Rupee at a rate of 10 Rupees to 1 Dinar. Bahrain gained independence from British colonial rule in 1971, further solidifying the Dinar’s status as the country’s official currency. Here is why the currency is so strong.

• Diversified Economy: Bahrain has cultivated a diverse economy beyond its oil reserves, focusing on sectors such as finance, tourism, and manufacturing. This diversification reduces the country’s dependence on oil revenues and enhances economic resilience, supporting the strength of the Bahraini Dinar.
• Financial Services Hub: Bahrain serves as a prominent financial services hub in the Gulf region, attracting international banks, insurance companies, and investment firms. The robustness of its financial sector contributes to investor confidence and the stability of the Bahraini Dinar.
• Fiscal Discipline: Bahrain has implemented prudent fiscal policies to maintain economic stability and control inflation. The government has pursued initiatives to reduce public debt and enhance fiscal sustainability, which bolsters confidence in the Bahraini Dinar.

3. Omani Rial (OMR):

Oman’s currency, the Omani Rial, also boasts a strong position compared to the US dollar, currently fetching around $2.60 USD. Oil and gas are the mainstays of Oman’s export sector, but they’re taking steps to expand into tourism and industrial development, ensuring a more well-rounded economy.

Moreover, the Omani Rial has a rich heritage dating back centuries. It was introduced in 1970, replacing the Gulf Rupee at a rate of 21 Rupees to 1 Rial following the country’s renaissance under the leadership of Sultan Qaboos bin Said. Here are some reasons why Omani Rial is so strong. 

• Stable Economy: Oman has maintained a relatively stable economy supported by its oil reserves, agriculture, and growing tourism sector. The stability of Oman’s economy contributes to investor confidence and supports the strength of the Omani Rial.
• Favorable Business Environment: Oman offers a favorable business environment with incentives for foreign investment and economic diversification initiatives. The government’s efforts to promote non-oil sectors bolster confidence in the Omani Rial.
• Sovereign Wealth Fund: Oman’s State General Reserve Fund and other sovereign wealth funds provide a buffer against external economic shocks and support the stability of the Omani Rial.

4. Jordanian Dinar (JOD)

The Jordanian Dinar is a stable currency, currently trading at about $1.41 USD per Jordanian Dinar. While not quite as strong as some of its oil-rich neighbors, Jordan has a solid export base in phosphates, potash, and fertilizers. They’re also seeing growth in the tourism industry.

The Jordanian Dinar has undergone several transformations. It was introduced in 1950, replacing the Palestinian Pound at par. Jordan has faced economic challenges over the years, including high unemployment and budget deficits, but its strategic location and stability have helped maintain the strength of the Dinar.

Here are some reasons for the strength of the currency. 

• Political Stability: Despite being situated in a region known for geopolitical tensions, Jordan has maintained relative political stability compared to its neighbors. This stability contributes to investor confidence and supports the strength of the Jordanian Dinar.
• Foreign Aid and Remittances: Jordan receives significant foreign aid and remittances from its expatriate population, particularly those working in the Gulf countries. These inflows provide stability to the country’s economy and support the value of the Jordanian Dinar.
• Economic Reforms: Jordan has implemented economic reforms aimed at improving fiscal sustainability, enhancing competitiveness, and attracting foreign investment. These reforms bolster confidence in the Jordanian economy and contribute to the strength of its currency.

5. Singapore Dollar (SGD):

Singapore stands out as a financial and trading powerhouse in Southeast Asia. Their strong currency, the Singapore Dollar, currently sits at an exchange rate of approximately $0.73 USD per Singapore Dollar. Electronics, chemicals, and refined petroleum products are all significant exports, and Singapore manufactures a wide variety of goods as well.

The Singapore Dollar has evolved since its introduction in 1967. Singapore’s currency management strategy has transitioned from pegging to a basket of currencies to a managed float regime, allowing the SGD to adjust to market conditions while maintaining stability.

• Robust Economy: Singapore boasts a highly developed and diversified economy, with strong financial services, manufacturing, and trade sectors. The country’s economic resilience and stability contribute to investor confidence and support the strength of the Singapore Dollar.
• Sound Monetary Policy: The Monetary Authority of Singapore (MAS) pursues a prudent monetary policy focused on price stability and sustainable economic growth. This approach has helped maintain the stability of the Singapore Dollar and support its value.
• Global Financial Hub: Singapore is a leading global financial hub, attracting international banks, investment firms, and multinational corporations. The strength of its financial sector and favorable business environment bolster confidence in the Singapore Dollar.

6. Brunei Dollar (BND):

Brunei’s currency, the Brunei Dollar, is pegged to the Singapore Dollar, meaning it inherits its strength. The exchange rate currently hovers around $0.73 USD per Brunei Dollar. Oil and gas reign supreme in Brunei’s exports, with liquefied natural gas (LNG) joining the mix. They also export some agricultural products.

The Brunei Dollar has been in circulation since 1967, replacing the Malaya and British Borneo Dollar at par. Brunei’s economy has been heavily dependent on oil and gas exports, but efforts to diversify into sectors like tourism and finance aim to reduce reliance on hydrocarbons. Here are some reasons for the strengths of the currency. 

• Oil and Gas Reserves: Brunei possesses significant oil and natural gas reserves, which form the backbone of its economy. The revenue generated from these resources provides stability to the country’s finances and supports the strength of the Brunei Dollar.
• Low Public Debt: Brunei has maintained low levels of public debt, thanks in part to its reliance on oil and gas revenues. This fiscal prudence enhances investor confidence and contributes to the stability of the Brunei Dollar.
• Monetary Authority Stability: The Brunei Currency and Monetary Board oversees the issuance and stability of the Brunei Dollar. Its prudent monetary policies and management of foreign exchange reserves help maintain the value of the currency.

7. Azerbaijani Manat (AZN):

The Azerbaijani Manat experiences more fluctuation compared to some of the other currencies on this list. As of today, it trades at roughly $0.60 USD per Azerbaijani Manat. Oil and gas are the backbone of Azerbaijan’s exports, but they’re working on developing their manufacturing sector and expanding agricultural exports.

The Azerbaijani Manat was introduced in 1992, replacing the Soviet ruble following Azerbaijan’s independence. The currency has faced fluctuations due to external factors such as oil prices and geopolitical tensions but has remained relatively stable in recent years.

• Energy Resources: Azerbaijan is endowed with significant oil and natural gas reserves, which play a vital role in driving economic growth and supporting the Azerbaijani Manat. Revenue from energy exports contributes to the country’s foreign exchange reserves and helps stabilize the currency.
• Diversification Efforts: Azerbaijan has undertaken efforts to diversify its economy beyond oil and gas, focusing on sectors such as agriculture, tourism, and manufacturing. These diversification initiatives aim to reduce reliance on hydrocarbons and enhance the resilience of the Azerbaijani Manat.
• Central Bank Policy: The Central Bank of Azerbaijan oversees monetary policy and exchange rate stability. Its interventions in the foreign exchange market and management of reserves help support the value of the Azerbaijani Manat.

8. Qatari Riyal (QAR):

Another strong currency in the region is the Qatari Riyal, currently valued at around $0.27 USD per Qatari Riyal.  Liquefied natural gas (LNG) is the star of the show for Qatari exports, although they do have some oil and manufactured goods in the mix as well.

The Qatari Riyal has been in circulation since 1966, replacing the Gulf Rupee at par. Qatar’s economy has experienced rapid growth due to its natural resources, leading to significant infrastructure development and investment in various sectors.

• Natural Gas Reserves: Qatar possesses vast reserves of natural gas, making it one of the world’s leading exporters of liquefied natural gas (LNG). Revenue from LNG exports contributes significantly to the country’s economic stability and supports the strength of the Qatari Riyal.
• Diversification Efforts: Qatar has undertaken efforts to diversify its economy beyond hydrocarbons, focusing on sectors such as finance, real estate, and tourism. These diversification initiatives aim to reduce reliance on oil and gas revenues and enhance the resilience of the Qatari Riyal.
• Prudent Monetary Policies: The Qatar Central Bank implements prudent monetary policies to maintain exchange rate stability and control inflation. Its management of foreign exchange reserves and interventions in the currency market support the value of the Qatari Riyal.

9. United Arab Emirates Dirham (AED):

The United Arab Emirates Dirham (AED) is another strong currency, currently trading at about $0.27 USD per Dirham. While oil remains a major export for the UAE, they’re actively diversifying their economy. Tourism, financial services, and re-export trade are all playing a growing role in the UAE’s economic success story.

The UAE Dirham was introduced in 1973, replacing the Qatar and Dubai Riyal at par. The currency has remained relatively stable despite fluctuations in oil prices and geopolitical tensions in the region. Here are some reasons why the UAE has such a strong economy.

• Diverse Economy: The UAE has a diverse economy with thriving sectors such as finance, tourism, real estate, and trade. This economic diversity reduces reliance on oil revenues and supports the strength of the UAE Dirham.
• Financial Hub: Dubai and Abu Dhabi serve as major financial hubs in the region, attracting international banks, investment firms, and multinational corporations. The strength of the financial sector contributes to investor confidence and stability in the UAE Dirham.
• Foreign Investment: The UAE has attracted significant foreign investment, thanks to its business-friendly policies, infrastructure development, and strategic location. This investment inflow supports the stability of the Dirham and enhances the country’s economic resilience.

10. Saudi Riyal (SAR):

Rounding out the list, the Saudi Riyal sits strong at an exchange rate of approximately $0.27 USD per Saudi Riyal. Oil is the dominant export for Saudi Arabia, but they’re investing heavily in the future with a focus on tourism, technology, and manufacturing to create a more well-rounded economy. It will be interesting to see how these investments play out in the coming years.

The Saudi Riyal has been in circulation since 1960, replacing the Saudi Riyal-Hejaz at a rate of 20 Qirsh to 1 Riyal. Saudi Arabia’s economy has experienced rapid growth due to its oil wealth, leading to significant infrastructure development and investment in various sectors. Here’s how

• Oil Reserves: Saudi Arabia possesses the world’s largest proven oil reserves, which form the backbone of its economy. Revenue from oil exports provides stability to the country’s finances and supports the strength of the Saudi Riyal.
• Fiscal Discipline: Saudi Arabia has implemented fiscal reforms to reduce dependence on oil revenues and diversify the economy. Initiatives such as Vision 2030 aim to promote non-oil sectors and enhance the resilience of the Saudi Riyal.
• Monetary Stability: The Saudi Arabian Monetary Authority (SAMA) oversees monetary policy and exchange rate stability. Its management of foreign exchange reserves and interventions in the currency market support the value of the Saudi Riyal.

A Table Comparison of the Strongest Currencies in Asia

Country	Currency	Exchange Rate (USD)	Top Exporter
Kuwait	Kuwaiti Dinar (KWD)	$3.26	Oil and petroleum products
Bahrain	Bahraini Dinar (BHD)	$2.65	Oil (diversifying with financial services, tourism, aluminum)
Oman	Omani Rial (OMR)	$2.60	Oil and gas (investing in tourism, industrial development)
Jordan	Jordanian Dinar (JOD)	$1.41	Phosphates, potash, fertilizers (growing tourism sector)
Singapore	Singapore Dollar (SGD)	$0.73	Electronics, chemicals, refined petroleum products (manufactures a wide range of goods)
Brunei	Brunei Dollar (BND)	$0.73	Oil and gas (liquefied natural gas (LNG), some agricultural products)
Azerbaijan	Azerbaijani Manat (AZN)	$0.60	Oil and gas (developing manufacturing, agricultural exports)
Qatar	Qatari Riyal (QAR)	$0.27	Liquefied natural gas (LNG) (some oil, manufactured goods)
United Arab Emirates	United Arab Emirates Dirham (AED)	$0.27	Oil (diversifying with tourism, financial services, re-export trade)
Saudi Arabia	Saudi Riyal (SAR)	$0.27	Oil (investing in tourism, technology, manufacturing)

Conclusion

Most people believe that the countries that appear to have the greatest number of tourists also have the best currencies, but that is not always the case. In this blog, we have discussed how governments that implement sound financial and fiscal policies end up stabilizing their economies in a much better way. 

From the stability driven by abundant oil reserves in the Kuwaiti Dinar to the resilience stemming from diversified economies in currencies like the Singapore Dollar, each currency reflects the intricacies of its respective nation’s economic trajectory. Additionally, the impacts of these strong currencies extend beyond their borders, influencing investment flows, trade balances, and the purchasing power of their citizens.

FAQs

Q1. What factors contribute to a currency’s strength?

A1. Currency strength is influenced by various factors including economic stability, fiscal policies, foreign exchange reserves, trade balances, and investor confidence.

Q2. Why are some currencies stronger than others in Asia?

A2. Currencies in Asia vary in strength due to differences in economic fundamentals, such as natural resource reserves, economic diversification efforts, fiscal policies, and geopolitical stability.

Q3. How does a strong currency impact a country’s economy?

A3. A strong currency enhances purchasing power for citizens, attracts foreign investment, and may lower the cost of imported goods. However, it can also pose challenges such as decreased export competitiveness and potential inflationary pressures.

Q4. Can currency strength change over time?

A4. Yes, currency strength is dynamic and can change over time due to shifts in economic conditions, policy interventions, geopolitical events, and global market dynamics.