Article: Worst-performing Emerging Markets

4 Worst Currencies in 2021

Lebanese Pounds. Credit:

Nov. 23, 2021

by Babak Babali

These four developing market currencies are struggling in 2021.

Currency devaluation is not a good thing for any economy, and it usually happens when something is terribly wrong in terms of the economy or politics.

Poor international trade, out-of-control printing of banknotes, or generally falling out with the rest of the world are all common and obvious reasons for this phenomenon.

The rate of currency devaluation can sometimes reach ridiculous proportions, which is usually known as hyperinflation.

In Weimar Germany, for instance, circa 1921-1922 the rate of 4.2 German Papiermarks to a US dollar jumped to 7,400 per US dollar, a more than 1,500-fold free fall.

The German currency's notorious devaluation forced people to carry large piles of banknotes to pay for simple everyday purchases such as loaves of bread.

This sad story has repeated itself several times in places like Bolivia, Argentina, Brazil, Peru, and Zimbabwe between the 1980s and the early 2000s.

More recently, there have been a number of poorly-performing currencies in global emerging markets, as detailed below.

Venezuelan Bolivar

One of the latest and most-publicized cases of a national currency going downhill happened—and is still happening—in Venezuela. Since 2016, the Latin American nation has been struggling with double-digit annual inflation rates.

Inflation in Venezuela hit the mind-blowing figure of 1,000,000% in 2018 according to the International Monetary Fund (IMF), up from 70% year-on-year in 2014. Currently, the Venezuelan bolivar has achieved the indisputable distinction of becoming the worlds worst-performing currency.

On August 23, 1994, an art duo called the K Foundation Inc decided to burn GBP1 million worth of cash in Scotland, the UK, for reasons better known to themselves. If anyone decides to do the same thing in 2021, a safer way could be to exchange their cash into Venezuelan bolivars and just wait for a day or two…

Lebanese Pound

Lebanon's national currency is not performing that well in 2021, either, although its devaluation rate is not nearly as high as that of the Venezuelan bolivar. Lebanon is undergoing a financial meltdown, resulting in the Levantine nation's inflation rate skyrocketing.

“The currency has lost nearly 90% of its value and plunged three quarters of residents into poverty," according to Al Jazeera. The country's new prime minister, Najib Mikati, hopes to bring the Lebanese pound's devaluation back under control after over a year of tragic economic mishaps.

Prime Minister Mikati has turned to the IMF for help to figure out a bailout for the country's economy, thus saving the Lebanese pound from continued free fall.

By Autumn 2021, the Lebanese pound was showing signs of stabilization.

But at a devaluation rate of nearly 100% year-on-year, it is still far from becoming the reliable currency that it once was.

Indian Rupee

In his famous work, The Importance of Being Earnest, Irish writer Oscar Wilde had one of the characters utter the following lines: “Cecily, you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational."

And the Indian rupee may be about to experience another fall, although this time it is not nearly as “sensational" as what happened in the days of Oscar Wilde.

The rupee has been among the best-performing Asian currencies for years, thanks to India's massive economic breakthroughs in recent years. The COVID-19 pandemic, however, has taken its toll on the value of the Indian currency.

“The Indian rupee has turned into Asia's worst-performing currency from being the best in the previous quarter. It's poised for more losses as a resurgence in coronavirus disease (Covid-19) cases to a record threatens to hamstring the economy," observed the Hindustan Times in an April 2021 article.

The rupee's devaluation is negligible compared to the two cases mentioned above. The currency has just gone from 73 per US dollar to 76 per US dollar, indicating a fall of just 4%. The Indian rupee's weakening stands out only because it was one of Asia's best-performing currencies not so long ago.

Turkish Lira

Turkey is no stranger to currency devaluation. The nation had experienced so much currency devaluation in the 1980s and 1990s that by 2005, the Turkish government decided to drop six zeros from its currency, introducing the New Turkish Lira.

Things went more-or-less smoothly for the Turkish currency for a few years after the unveiling of the new lira. In recent years, however, there have been signs that another wave of devaluation may be ahead of the Turkish economy.

The equivalency rate of the lira has plunged from 1 lira per US dollar in 2011 to just over 12 per US dollar in November, 2021. In other words, the new Turkish lira has lost some 90% of its power in the space of a decade.

This is not a happy sign for those elder citizens who still remember the bad old days of hyperinflation in the 1980s, although Şahap Kavcıoğlu, the new governor of the Central Bank of Turkey has reassured the nation and foreign investors that the Turkish lira will soon be stabilized under his watch by measures such as interest rate cuts.

ADVERTISEMENT