Throughout history, competition over valuable resources has driven trade agreements, political treaties, colonial enterprises, and devastating wars. At present, nations primarily rely on the strength of their domestic economies to secure these resources. A higher-value currency makes a country’s imports less expensive and its exports more expensive. The U.S. dollar’s long-standing overvaluation is beginning to decline, which means it’s losing ground to non-traditional currencies in foreign exchange reserves.
Africa’s growth performance remains precarious, with deep-seated structural challenges and susceptibility to shocks. Despite the headwinds, 21 countries are anticipated to attain a growth level above 5% in 2025, with Niger, Ethiopia, Rwanda, and Senegal potentially reaching the 7% threshold necessary for poverty reduction and inclusive growth. Ostensibly strong currencies observed in African countries are the result of deliberate policies and strategic economic management that jointly foster stability and protect against depreciation.
Currency Strength Is A Critical Component Of International Trade
As the name clearly suggests, currency strength reveals the strength of a particular currency against other peers. For economists, it’s calculated as purchasing power, whereas for financial traders, it can be represented as an indicator, illustrating multiple factors related to the currency – e.g., overall economic performance. Currencies are fundamental tools that facilitate transactions, and the value of currency directly impacts the terms of exchange. In regions like Africa, identifying the strongest currency in Africa provides insight into which economies are performing well and maintaining stability in global trade.
Currencies are akin to stocks and commodities since they offer the potential for capital appreciation. We often think of the price of a currency in terms of another currency (e.g., how many U.S. dollars does it cost to purchase a Tunisian dinar?), yet currencies can be priced in terms of goods (e.g., how many Moroccan dirhams can I buy with an iPhone?). Currency fluctuations can affect the local and global economies alike. When the U.S. dollar is weak, investors benefit by putting their money into foreign markets.
The Top 5 African Countries With The Strongest Currencies
Within Africa, a few major economies dominate, exerting significant influence over trade, markets, and production, effectively controlling resources, and shaping economic policies. They are:
Tunisia
According to the World Bank, Tunisia’s economy is projected to grow by 1.9% in 2025 due to improved rainfall, which directly impacts crop yields and agricultural productivity, and gradual stabilization across key sectors. Manufacturing faces several challenges, including reliance on European markets and issues with labor relations, but resilience in tourism contributed to economic stability. The Tunisian Dinar (TND) is the strongest currency in Africa, and it trades at roughly 2.94 TND per USD.
The TND isn’t pegged to any currency, and neither are there currencies that are pegged to the Tunisian Dinar. Tunisia is one of numerous countries that use variants of the dinar, namely Bahrain, Algeria, Libya, and Iraq. The African country remains steadfast in the face of a convoluted international and local landscape, continuing to enhance social protection and economic growth via targeted programs and reforms. It has an export-oriented economy, which is highly dependent on petroleum and agricultural products.
Libya
Libya’s economy relies overwhelmingly on its petroleum sector, which accounts for 95%y of its export earnings and 60% of its GDP. Although to a lesser extent, Libya capitalizes on the gas sector, and the country is the 4th natural gas producer on the African continent. The Libyan Dinar (LYD) is the official currency of Libya. Since it operates under a floating exchange rate system, the value of the Libyan Dinar fluctuates based on supply and demand in the foreign exchange market. The current value of one LYD is $0.18 USD.
Morocco
Since the mid-1980s, the Moroccan economy has initiated a series of privatizations and economic reforms encouraged by the World Bank and the International Monetary Fund. The improvement in living conditions has been particularly remarkable for rural households. Having transitioned from a low-income to a middle-income economy, Libya must now create more jobs, especially for women and youth, which requires investing in human capital and innovation.
The Moroccan Dirham (MAD) is the official currency unit of Maroc. The African country is in an exchange rate transition as it plans to move away from the current system of pegging the dirham to the euro and the U.S. dollar. The success of this reform depends on stakeholder engagement, efficient communication, and policy alignment. Companies, notably in the energy and commodity sectors, must adopt hedging strategies to protect themselves from the adverse effects of volatility. One MAD equals $0.11 USD.
Ghana
Productivity has stagnated in services, the dominant employment sector, and is rising slowly but surely in industry and agriculture. Ghana is the world’s second-biggest cocoa producer after Côte d’Ivoire, contributing to 25% of the world’s supply, but there are concerns about the low income of farmers. Cocoa farmers see little of the wealth and argue that prices fail to reflect the crop’s true value on international markets. The Ghanaian Cedi (GHS) is the unit of currency of Ghana. The GHS is one of the strongest currencies on the African continent, reflecting Ghana’s ongoing economic resilience.
Botswana
Botswana’s economy is generally stable and prosperous. It largely depends on diamond exports, which contribute approximately 30% of national revenues and 70% of foreign exchange receipts. Robust institutions, prudent economic management, and a relatively small population have made Botswana an upper-middle-income nation with ambitions to reach high-income status. The Botswana Pula (BWP) is the national currency of Botswana. Pula means rain in Setswana, which is very scarce and, therefore, a blessing. A subunit of the currency is called thebe and represents defense.
What Does It Mean To Have A Strong Currency?
Over the past decade, African currencies have increased in value relative to other currencies, and this appreciation directly affects the economy of Africa, achieving the same result as a tighter monetary policy. The effects are felt most directly by the trade sector. Imported goods are cheaper, and it’s easier to take a vacation in a foreign country. Equally, citizens have more disposable income, so they can balance essential needs, save for the future, and enjoy discretionary spending. While not yet at the level of the strongest currency in the world, some African currencies are showing impressive resilience and growth.
Although the near-term outlook for several strong African currencies looks promising, given the current economic conditions and policy frameworks, there’s an inherent degree of uncertainty due to political risks, external price shocks, and global market dynamics. On the flip side, other nations continue to struggle with inflation and volatility, placing their currencies among the weakest currencies. As an investor, you must remain vigilant and adaptable as these factors evolve.
