African countries with weak exchange rates compared to the US dollar

For many years, Nigeria which is Africa’s largest economy by GDP has struggled to save its currency value while maintaining the stability of its exchange rate. In 2021, Africa’s biggest oil producer has faced forex issues. Here we shall examine the African countries with the weakest foreign exchange on the continent.  

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Currency valuation and what it means

In simple terms, currency valuation is the exchange of a sovereign country’s currency when exchanged with other countries. This depicts the monetary value nexus for their goods and services. 

All countries engage In international trade. Exports from countries with weaker currencies are way cheaper than those with stronger currencies. On the flip side, imports from countries with weaker countries stand out as more expensive. What this means is that some countries weaken their currencies intentionally to boost exports. Weak currencies in Africa are attributed to poor economic fundamentals and several other factors. 

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In 2021, here are the African countries with the weakest exchange rates against the dollar. The dollar is mostly used as a benchmark currency given its wide use globally in international trade. As a disclaimer, it's worth noting that exchange rates are volatile hence the rates might have changed by the time of publication of this article. This article uses Business Insider’s currency converter that converted 100 of the respective country’s currency to the dollar.  

São Tomé and Príncipe: dobra (Db)

The small island classifies as a lower-middle-income state with a fragile economy. The dobra is the weakest and least valued currency in Africa. STD 100 will convert to $0.00483. The country comprises an archipelago that can be divided into six districts and an archipelago that divides into six districts including the Autonomous Region of Príncipe.

Burundi: franc (FBu)

Burundi is a landlocked and densely populated East African country with 70 percent of its population living below the poverty line. Burundi’s sovereign currency is weak with 100 BIF exchanges to 0.0502 USD.  

Guinea: Franc (GFr)

Guinea’s currency is weak due to high inflation. The weak currency is due to the high inflation rate, progressive politics, and a devalued currency. As one of the continent’s weakest currencies, the Guinea franc exchanges at the rate of 100 GFr to 0.0105 USD. This West African country, Guinea has a population of 10.5 million which is known for its rich reserves of gold, iron ore, bauxite, and minerals. Despite its wealth, Guinea remains one of the poorest countries worldwide.

Malagasy: Ariary (Ar)

Madagascar is a small Indian Ocean island on the southern coast of Africa. This is the fifth-largest island in the world with over 25.6 million inhabitants. A conversion of 100 Ar exchanges to 0.0251 USD. Despite the rich natural resources is has some of the highest poverty rates worldwide. 

Uganda: Shilling (UGX)

Uganda is landlocked in East Africa and the backbone of its economy is agriculture where coffee is the primary export. As per World Bank data, Uganda remains a heavily indebted country. Uganda has a very weak currency which exchanges from Ush 100 to 0.0281 USD. The value of the shilling here is determined by the free-floating exchange rate system which depends on supply and demand in international foreign markets. 

Tanzania: Shilling (Tsh)

The value of the Tanzania currency is arrived at through a free-floating exchange rate system based on the demand and supply in international foreign markets. 

Malawi: Kwacha (MWK)

The adoption of the Kwacha, replaced the British pound sterling, Rhodesian dollar, and the South Africa Rand. Malawi’s Kwacha exchanges for MWK 100 to 0.1227 USD. 

The value of the currencies fluctuates and might not be the same from the time of publication.