Currency Devaluation: 10 Countries Affected in 2022
There’s been rampant currency devaluation across several countries this year, which in turn increased the rise of inflation worldwide.
The depreciation of local currencies was not limited to developing countries. Even the most developed countries’ currencies suffered losses.
It doesn’t help that the US dollar has risen by almost 25% against some of the most traded currencies this year. Many developing countries have taken a further hit because of this.
Why?
The appreciation of the dollar affects the price of imports, especially for countries that heavily depend on imports to me et domestic demand for energy and food. This leads to an increase in the inflation rate in such countries.
Also, many developing countries have their debt stocks and debt service payments mostly denominated in dollars. The rise of the dollar automatically increases the debt burden of these countries.
Without wasting time, let’s dive deep into the currencies that have devalued in 2022. It’s sad to say that there are more than 10, but we will be dealing with countries that took the greatest hits.
10. Ghanaian Cedi
The Ghanaian cedi became one of the worst-performing currencies in the world in October after it lost 57.19% of its value against the US dollar.
According to a Bloomberg report, the cedi experienced its biggest decline in 22 years. After its decrease in October, that took losses in 2022 to almost 52%, making it the worst among the 148 currencies tracked.
9. Sri Lankan Rupee
The Sri Lankan rupee started the year valued at 200 rupees, but it decreased to an all-time low of 357 rupees to a dollar in May, and it has been steadily decreasing. In October, it was down to 361. The country has been facing its worst financial crisis in over 70 years, which has led to the default of its debt payments. The rupee has dropped 44.98% this year.
Inflation increased to a record high of 69.8%, and the Central Bank of Sri Lanka warned that it could continue increasing in the following months. Sri Lanka’s government attributed the collapse of the economy to the pandemic. However, it is believed that the debts they owe to China and political mismanagement also contributed to it.
8. Egyptian Pound
The Egyptian pound has lost 36.14% of its value against the dollar since the beginning of 2022. It depreciated to a record low of 24.3 against the U.S. dollar in October. This was after the authorities announced a $3 billion International Monetary Fund deal.
There have been concerns about whether the currency will eventually level out after the central bank announced that it had moved to a “durably flexible currency regime,” which makes the value of the pound determined by demand and supply.
Also, Egypt’s economy suffered from Russia’s invasion of Ukraine and is still reeling from the after-effects.
7. Turkish Lira
The Turkish lira has steadily fallen in value since 2013, but it has taken a nose dive in the past couple of months. 28.53% of the currency’s value has been devalued since the beginning of the year. At the moment, a dollar is worth almost $19, as opposed to $13 at the beginning of the year.
According to Euro news, confidence in the economy has all but collapsed as a result, while investors (both foreign and local) have pulled their money out of Turkey because of the currency’s free fall.
6. Colombian Peso
The Colombian peso has lost 16.57% of its value against the US dollar this year. The peso is at an all-time low. It weakened below 5,000 per dollar in October. This greatly contrasts its value at the beginning of the year, when one dollar traded for 4,065 pesos.
This depreciation has pushed Colombia’s economy deep into inflation. The Colombian Central Bank predicted that these rates would continue beyond what the markets predict.
5. British Pound
As I stated earlier, devaluation occurred this year even in highly developed countries. The British pound has been on a roller coaster ride in the past few months and has lost 11.30% of its value. It has been a series of ups and downs for the currency. However, It fell to a 37-year low against the dollar this year. It is roughly valued at $1 to £1. A pound was worth $1.3 at the start of 2022.
It dropped to $1.11 after the Bank of England declared that the U.K. had already begun its longest-ever recession on November 3. The British economy this year has faced slower economic growth and has battled the impacts of inflation.
4. Chinese Yuan
Even though it is not a developing country, the pangs of devaluation dug deep into its currency this year. The Chinese yuan depreciated 10.29% against the US dollar this year. In October, it hit its lowest level in nearly 15 years. Yuan was traded at 7.3 per dollar.
According to CNN, one of the reasons for this was that investors dumped Chinese assets after the ruling communist party unveiled its new leadership for the next five years. The party chief, Xi, secured an unprecedented third term of rule. Their stocks plummeted in a day, wiping out billions of dollars in market value.
3. Nigerian Naira
The Nigerian naira has been on a steady downward spiral since the beginning of the year. While the naira was exchanged at 442 to a dollar in the official market, it reached an all-time low of N850 in the parallel market in November. This year has been a year of several all-time lows for Nigerians.
It got worse when the Central Bank of Nigeria announced the unexpected redesign of the Nigerian currency. Nigerians turned to changing their cash for dollars on the black market. The increased demand for dollars sent the naira tumbling to as low as 850. In fact, some abokis (money changers) traded as high as 900 to the dollar.
However, in the official market, it has devalued just 7.52%.
2. Iranian Rial
The Iranian currency, the rial, is considered one of the worst-performing currencies in the world. Its journey towards depreciation continued this year. It fell to its lowest level recorded in Iran’s unregulated open market in November. It fell to an average of 363,500 to the US dollar.
According to Iranintl, The Iranian rial has lost about 47% of its value since July 2021, when the new government, headed by Ebrahim Raisi, took office. However, it has lost only 0.35% so far this year.
1. Lebanese Pound
The Lebanese pound has been fairly stable so far. It has devalued by just 0.32%. However, that might likely change soon.
In September, the government announced that it planned to slash its official rate. The value of the lira has been 1,507 per dollar for 25 years. The government announced that it will be replaced with a rate of 15,000 in order to unify numerous exchange rates. This is 10 times more than the previous official rate.
Safeguard your finances from the rampant currency devaluation
Many currencies depreciated this year, and the decrease is bound to continue till the end of the year. This has influenced the rise of inflation in several countries. However, all hope is not lost.
If your local currency devalued this year, you can still safeguard your finances and hedge your funds against inflation.
How?
This answer is simpler than you think. Convert your currency to US dollars. This protects your funds from devaluation.
You can also take it a step further. Save your money in dollars with Xend Finance and earn up to 15% on your savings.
Xend Finance is a global crypto bank backed by Binance and Google Launchpad with over 120,000 users who trust them. Our award-winning technology allows you to hedge your funds against inflation by saving in dollars.
With your funds saved on the Xend Finance platform, no matter how bad your local currency gets, you can rest assured that your money does not lose its value.
Click here to download the Xend Finance app and start saving.
