The costliest currency in the world in comparison to all other currencies is the Kuwaiti dinar (KWD). The dinar currently trades at 1 KWD to 3.25 USD, which is the highest currency pair vs USD.
In this article, we’ll take a look at currency pairs, and the highest exchange rates that ever existed, and answer common questions we receive about the costliest currency in the world.
This article is part of our free series on how to choose where to open, which money to hold, and how to open foreign currency accounts.
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Costliest Currency in the World?
The costliest currency in the world compared to all other currencies is the Kuwaiti dinar. The Kuwaiti dinar with the currency symbol د. ك, and ISO 4217 Code KWD trades at 1 KWD to 3.25 USD. KWD became the costliest currency in the world in 2023.
For comparison, the second costliest currency in the world is the Bahraini dinar (BHD), which only trades at 1 BHD to 2.65 USD.
The Kuwaiti dinar was first introduced in 1961, as a replacement for the Gulf rupee. The dinar continued to be the currency of Kuwait until Iraq invaded and declared it invalid, forcing a 1:1 exchange for Iraqi banknotes.
During the invasion and occupation, large quantities of banknotes were stolen from Kuwait. Not surprisingly, following liberation, the Central Bank of Kuwait issued a new series of Kuwaiti dinar banknotes, demonetizing the old currency and any currency that was stolen.
What Are Currency Pairs?
Currency pairs refer to the quote that exists when trading different currencies on the foreign exchange market. The pair includes two currencies, which are known as the base currency and the counter currency.
In a currency pair, the base currency is the reference point and is equal to the single unit of the currency, such as one USD. The counter currency is quoted in terms of the base currency, showing how much you need to spend in the counter currency in order to buy a unit of the base currency.
For example, 1 KWD is equal to 3.25 USD, which makes the Kuwaiti dinar the highest reference currency against the United States dollar in the world.
Highest Currency Exchange Rate Ever
It’s hard to identify the highest exchange rate that has ever existed, but there are a few periods of hyperinflation that stand out in modern history as obvious examples, leading to extreme exchange rates.
Zimbabwean dollar
The first example is the Zimbabwean dollar (currency symbol $ and ISO 4217 Code ZWL). The Zimbabwean dollar was the official currency of Zimbabwe from 1980 to 2009. It went through a period of hyperinflation, eventually peaking at an estimated exchange rate of approximately 2.6 trillion ZWL to 1 USD. Not surprisingly, the ZWL was eventually abandoned in 2009 as legal tender, it was later demonetised in 2015.
German Papiermark
The most famous example from history is likely the hyperinflation of the Papiermark in the Weimar Republic following World War I.
The catalysts for hyperinflation of the Papiermark have been covered at length. But key catalysts include financing the war through debt (instead of tax), suspension of the gold standard during the war, losing the war and committing to reparations, distributing raw and processed resources as part of payment, and of course devaluing the currency in order to meet commitments.
The result was catastrophic. At its peak, the German marks reached an estimated 4.2 trillion marks to 1 USD. Not surprisingly, the mark was abandoned and a new currency was introduced to try and stabilize the economy.
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into the costliest currency in the world. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Which Currency Is the Highest in the World?
The highest currency in the world is the Kuwaiti dinar, which is the highest currency pair against the USD, currently valued at 3.25.
Which Is the No 1 Cheapest Currency in the World?
The no. 1 cheapest currency in the world is currently the Iranian rial (IRR). The current value of 1 USD is 42,261 IRR. For comparison, one unit of the Kuwaiti dinar (KWD), which is the costliest currency in the world, in IRR is valued at 137,707.
What Are the Top 5 Highest Currencies?
The top five highest currencies in the world when compared to the United States dollar are the Kuwaiti dinar (KWD), the Bahraini dinar (BHD), the Omani Rial (OMR), the Jordanian dinar (OMR), the British pound (GBP), the Cayman Islands dollar (KYD), and the Swiss franc (CHF).
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