The 10 weakest currencies in 2025

Around the world, many countries with devalued currencies are facing significant economic challenges. Their currencies continue to depreciate due to various factors, including runaway inflation, political conflicts, lack of economic diversification, international sanctions, and limited foreign investment. In this article, we will explain the economic reasons behind the devaluation of these currencies and analyze how these events impact the global financial system.

The First Row of Currencies with the Lowest Exchange Rates

Lebanese Pound – When a country’s currency is disconnected from the financial system

Lebanon is experiencing one of the most severe modern economic crises. The Lebanese Pound (LBP), which had maintained stability through a peg to the US dollar for decades, is now the world’s weakest currency. Since 2019, the country has been caught in triple-digit inflation, rapidly rising poverty, and banking system collapse.

The situation worsened when the Lebanese government defaulted on debt in 2020, and the Lebanese Pound lost 90% of its value on the parallel market. The crisis is not solely economic; it is intertwined with long-standing political instability and geopolitical tensions. The COVID-19 pandemic and the Beirut port explosion in 2020 further exacerbated the crisis. Today, Lebanon stands as a prime example of the world’s most devalued currency.

Iranian Rial – The aftermath of sanctions and tensions

The history of the Iranian Rial (IRR) dates back to the 19th century when Iran was known as Persia. The Islamic Revolution of 1979 brought fundamental changes to the economic and political system, leading Iran to become a currency-devalued country.

The Rial has been heavily impacted by international sanctions imposed over decades, especially related to nuclear programs and the Iran-Iraq War (1980-1988). Isolation from global markets narrowed Iran’s economy and increased dependence on crude oil exports. When oil prices fell, Iran’s economy suffered directly. Political instability and poor governance further fueled hyperinflation, making Iran a clear example of a currency-devalued country in Asia. Currently, the exchange rate is about 42,112 rials per dollar.

Vietnamese Dong – A weak currency with advantages

The history of the Vietnamese Dong (VND) is as complex as Vietnam’s political history. After the Vietnam War ended in 1975, the dong became the national currency of unified Vietnam. Initially, the dong struggled with high inflation and frequent economic reforms, but since the 2000s, as Vietnam opened its economy, the dong has gradually stabilized.

Interestingly, the dong’s depreciation has benefited Vietnam’s economy. The low value makes Vietnamese exports cheaper in foreign currency, boosting competitiveness in global markets. Vietnam maintains a managed floating exchange rate to support exports. While this strategy may pose long-term challenges, it has helped Vietnam become a major manufacturing hub in Asia.

Laotian Kip – Lack of development keeps the currency weak

Laos is one of Southeast Asia’s slowest developing economies. The Laotian Kip (LAK), in use since 1952, has depreciated in line with the country’s economic capacity. Laos relies heavily on agriculture and resource exports.

Risks stem from limited economic diversification, low foreign investment, and underdeveloped industrial sectors. Post-COVID-19, the kip faces inflationary pressures and ongoing economic challenges. Laos exemplifies a country whose currency must be re-evaluated to attract foreign investment and stimulate growth.

Indonesian Rupiah – A fragile emerging market currency

Indonesia, with the fourth-largest population globally and the largest economy in Southeast Asia, still has a weak Indonesian Rupiah (IDR). As an emerging market, the rupiah is vulnerable to global investor sentiment. When investors seek safe assets, the rupiah can depreciate rapidly.

Indonesia’s heavy reliance on commodity exports links the rupiah’s value closely to commodity prices. Consequently, Bank Indonesia sometimes intervenes in the market to stabilize the currency. These issues highlight Indonesia’s structural economic vulnerabilities and its currency’s devaluation risks.

Other currencies in the top 10 list

Uzbek Sum (UZS)

Uzbekistan, once part of the Soviet Union, became independent in 1991. Heavy government controls, limited economic liberalization, and reliance on natural resources have kept the sum undervalued. Although reforms began in the 2010s, the currency remains weak.

Guinean Franc (GNF)

Guinea is rich in minerals and natural resources, but political instability, corruption, and weak infrastructure keep the franc under pressure. The country depends on agriculture and mining, but struggles to convert resources into widespread prosperity.

Paraguayan Guarani (PYG)

Paraguay is a small, relatively isolated economy that relies heavily on agricultural exports, especially soybeans. Despite growth in agriculture, economic diversification remains limited. The guarani remains weak, and the country faces structural challenges.

Malagasy Ariary (MGA) and Burundian Franc (BIF)

Madagascar and Burundi are among the poorest countries globally. Both economies depend on subsistence farming, with high inflation and political instability. Madagascar’s MGA is not decimalized (1 Ariary = 5 Iraimbilanja). Burundi suffers from chronic trade deficits, food insecurity, and reliance on international aid. Both currencies symbolize nations struggling for economic survival.

Factors driving currency devaluation

Exchange rates do not change randomly; many factors contribute to a country’s currency being undervalued.

Higher interest rates often attract foreign investment, increasing demand for the country’s currency and causing appreciation. Conversely, undervalued currencies tend to have low interest rates, discouraging foreign capital.

Inflation plays a key role: countries with low inflation generally see their currencies strengthen, as their purchasing power remains stable. High inflation hampers investment and causes depreciation. Most undervalued currencies face uncontrollable inflationary pressures.

The current account balance offers insights into economic health. A trade deficit indicates imports exceed exports, requiring foreign capital inflows, which can weaken the currency.

Political instability, conflicts, sanctions, and unexpected events create uncertainty for investors. Investors tend to avoid unstable countries, reducing demand for their currencies. Many undervalued currencies face these challenges.

Summary

Whether it’s the Lebanese Pound, Iranian Rial, or Burundian Franc, each undervalued currency faces pressures from economic, political, and governmental factors. Understanding the reasons behind these devaluations is crucial not only for investors but also for grasping the complex relationships between institutions, politics, and global finance. Countries with devalued currencies must strive for economic stability and reassess their currency valuation strategies to achieve future resilience.