2024 is almost over, and it has been unforgiving to some currencies that lost most of their value. Knowing the list of currencies that lost the most value might give traders and investors a unique perspective on which countries are more interesting to invest in or which currencies to trade. The main reason is that the devaluation trend is most likely to continue, providing Forex traders and investors with new opportunities to capitalize on price movements.
Let’s list the top losers in 2024 and also explain what were the main reasons and how it is going for these economies to anticipate the most likely scenarios for 2025.
What is currency devaluation?
Currency devaluation refers to the phenomenon of one currency losing its value against other currencies due to government policies, economic instability, or market reactions. Geopolitical events and sanctions also heavily impact any country’s currency, causing it to lose its value rapidly. While it is never a positive thing for the country’s economies, traders and investors can capitalize on these larger price movements as they can exchange currencies or use brokers to take trading positions. To capitalize on currency devaluation, you must have a certain understanding of financial markets. You can learn more about FX trading for beginners with this guide, which will allow you to understand how Forex markets work and how you can trade and invest for profits.
Why is currency devaluation bad for the economy?
Deflation when left unchecked can be devastating for the country’s economy, and there are many 3rd world country examples where hyperinflation destroyed the wealth of people. It has adverse effects on the economy and often leads to:
- Higher interest rates — Central banks raise rates to control inflation, which typically slows down economic growth
- Loss of investor confidence — Devalued currency scares off foreign investors, and damages confidence in local investors as well, eventually leading to economic instability.
How to detect currency devaluation signs early.
Detecting potential price devaluations for various currencies can be very profitable. Here is how you can do it:
- Inflation — Rapid price increase in consumer prices is a good sign of devaluation. This can be checked by monitoring the Consumer Price Index (CPI) data, which is released constantly on economic calendars.
- Central bank policy change announcements — If there is a sudden shift in central bank policy regarding interest rates, especially reductions, it can be a good predictor of devaluation.
- Trade deficits and foreign debt levels — Larger than expected trade deficits and rising foreign debt can seriously weaken the currency. Dependency on foreign investment solely is never good for the fiat currency.
- Political instability — Countries under political instability, including unstable governments or frequent policy changes, are expected to have higher devaluation risks because investors’ confidence wanes.
- Sanctions — Sanctions can seriously damage the country’s currency, just like With Russia and Iran.
Let’s now switch to the actual list of most devalued currencies in 2024.
List of the most devalued currencies
Here are the top devalued currencies in the world right now, together with explanations.
Iranian Rial (IRR)
1 USD = 42,000 IRR
IRR is the cheapest currency in the world, caused by several long-term and medium-term factors. The country started its decline in 1979 with the Islamic Revolution. The country has been facing severe inflation, which was only strengthened by recent tensions with Israel when the two countries exchanged arms.
2025 prediction — Negative (serious ongoing war threats versus Israel).
Vietnamese Dong (VND)
1 USD = 25,000 VND
Vietnam has a centralized economy, which is typically bad for the economy. The government is trying to improve economic conditions, but its currency is still devalued, despite having a brighter future ahead.
2025 prediction — Positive (Government is trying to improve the economy).
Sierra Leonean Leone (SLL)
1 USD = 22,800 SLL
This African currency was seriously damaged by poverty, which was caused by civil wars and Ebola epidemics that are a constant threat.
2025 prediction — Mostly bearish (financial aid is not enough).
Lao or Laotian Kip (LAK)
1 USD =
LAK was always cheap, and it actually started moving higher recently, but the currency is still devalued. There are plans in action to make a railway from Beijing (China) to Laos, contributing to mostly bullish sentiment.
2025 prediction — Bullish.
Indonesian Rupiah (IDR)
1 USD = 15,700 IDR
IDR was affected seriously by the decreasing foreign reserves of the country and its heavy dependence on the export market. Price reduction on commodities is typically very bearish for IDR.
2025 prediction — Neutral to Bullish.
Uzbekistan Som (UZS)
1 USD = 12,700 UZS
Uzbekistan has been trying to improve its currency by implementing reforms, but to no avail, the currency has not seen bullish momentum for a long time. The country has implemented reforms lately and the UZS will likely appreciate it in the medium to long term.
2025 prediction — Mostly bullish.
Guinean Franc (GNF)
1 USD = 8,600 GNF
Corruption is a plague that has destroyed Guinea’s currency coupled with political instability, the future seems very dark for GNF.
2025 prediction — Neutral to bearish.
Paraguayan Guarani (PYG)
1 USD = 7,900 PYG
High inflation, unemployment, increased poverty, and corruption plague the Paraguayan economy which was directly reflected in its currency price which got greatly devalued over the years.
2025 prediction — Bearish.
Cambodian Riel (KHR)
1 USD = 4,000 KHR
KHR is one of Cambodia’s currencies as the country operates a dual currency system. The US dollar is also acceptable and works in the country. KHR is mostly used in regions, while USD is popular in popular tourist spots.
2025 prediction — Neutral.
Ugandan Shilling (UGX)
1 USD = 3,600 UGX
Uganda’s immigration policies implemented by Idi Amin were reflected negatively on the country’s currency. The country has been doing good recently with the government implementing some bullish policies, but the overall picture remains the same for the UGX.
2025 prediction — Neutral to bullish.
