Article: Best-Performing Emerging Markets

3 Top Currencies in 2021

Numerous hundred Chinese yuan banknotes. Credit:

Nov. 30, 2021

by Babak Babali

Which currencies are generally performing well in the developing world in 2021?

You may have heard of many who made their fortune in the currency trading market, although—admittedly—many have entered the currency trade with high hopes only to sustain heavy losses.

The currency market can be both rewarding and unforgiving, depending on your knowledge, analytical tools, and at times, intuition.

Long-established currencies used in developed economies such as the US dollar, the euro, and the British pound have a pretty much stable value, with negligible fluctuations.

After all, that is why they are called anchor currencies.

Traders cannot expect to earn much by buying and selling anchor currencies, although the risk of sustaining heavy losses is also small in such trades.

Trading anchor currencies is, in short, pretty much a pointless business for small investors—no losses, and no gains!

Currencies used in emerging markets, on the other hand, sometimes gain in value over a relatively short period, making investments profitable for independent investors—but never free of risk.

There are many factors which influence the value of a developing country's legal tender such the country's political stability, its diplomatic ties, and its openness to foreign businesses, just to name a few.

Below, we have compiled a list of three currencies which have done well toward the end of 2021. Please remember that this lost is for information purposes only, and TBY neither encourages nor discourages you to invest in these currencies…

The list has been compiled retrospectively, that is by looking back on how the currency market evolved in the first three quarters of 2021, which does not necessarily tell us what will happen in the coming days and months.

Chinese Yuan

First, let us clarify that China's economy is difficult to categorize. It has many traits of an emerging market, but the Asian giant's economy has become so huge in size over the 2010s that it dwarfs many developed economies—almost all of them in fact!

We know for sure, however, that the Chinese economy is a force to be reckoned with—whether you like it or not.

It is no wonder then that the Chinese yuan (more formally known as the people's renminbi) has been going strong.

As of November, 2021, just under 6.4 Chinese yuan can fetch a US dollar, giving the Chinese currency the second best equivalency rates it has touched over the last five years.

Brazilian Real

Rio de Janeiro, Brazil. Credit: Shutterstock / Celso Pupo

With Brazil's notable economic breakthroughs since the year 2000, its currency enjoyed steady growth in terms of value between 2005 and 2010.

It was relieving to see that Brazil, a country that suffered from prolonged episodes of hyperinflation in the 1980s, finally had a steady currency.

The COVID-19 pandemic, however, has been taking its toll on the Brazilian real since February, 2020. During the pandemic, the real lost over 30% of its value, but there are signs that it may make a comeback soon.

For one thing, the IMF has a positive forecast for Brazil in terms of GDP and purchasing power parity (PPP) toward the end of 2021, and chances are that the Brazilian economy will continue to recover in 2022.

We can tentatively deduce that after a period of poor performance, followed by stabilization, the real may once again gain in value in 2022.

South African Rand

Large stacked container ship leaving the port of Cape Town, South Africa. Credit: Shutterstock / Chris Troch

South Africa's currency, the rand, has been more-or-less steady in terms value over the last five years, with the average equivalency rate of 2.5 rand per US dollar.

At the height of the pandemic in South Africa, however, the rand lost some value, hitting the rock bottom in June, 2021, when over three rand fetched a single dollar.

Since then, fortunately, the South African currency has made a good recovery. As of November, 2021, it has become more valuable than any time over the last year.

However, the emergence of the Omicron variant of SARS-COV-2 and the ensuing restrictions on travel to South Africa could buck this trend in the coming weeks.

The final note

As mentioned earlier, a currency's performance is not a foolproof indicator of its future.

If you wish to become a currency trader, therefore, you are well advised to come up with a currency portfolio.

As you diversify your currency portfolio, you minimize the risk of sustaining heavy losses in case a prediction goes wrong—as they often do!