The common factor among these currencies is that they usually belong to countries that have been sanctioned by the United States.
The fall of Venezuela’s currency over the last four years has been one of the most sensational bear runs in recent times. And yet, considering that the Latin American country is one of the largest producers of crude oil in the world, one is bound to stop and wonder how it found itself on such a precarious footing.
Logically speaking, nothing can depreciate more than 99.99 percent and the Venezuelan bolivar had reached that point a long time ago. Now, if anyone wants to know what it is worth, all one can go by is how many bolivars he or she would have to pay for one dollar in the black market. Today’s rate was 108,279 bolivars for a dollar, up from just 3,500 bolivars to the dollar a year ago.
There are many reasons for Venezuela’s perverted economic collapse, not in the least its overdue debt payments. Other factors like a severe shortage of food and medicines in the country, an increase in minimum wage last year, and the government cutting the cash requirements at all Venezuelan banks have contributed in juicing up the flow of bolivars in the economy and reducing its value.
In addition to this, with more and more fear that the bolivar would be worth nothing very soon, people are continuously looking to exchange their bolivars for dollars. This has ended up inflating demand for the dollar, which has risen even more against the bolivar as a result. Many experts have gone as far as to reckon that against this backdrop, there is no visible end to Venezuela’s currency problems.
In an effort to combat this and get out of the debt trap Venezuela finds itself in today, President Nicolas Maduro on Monday announced that the country will create its own ‘petrocurrency’ backed by its reserves of oil, gas, gold and diamonds. The president said that it would help Venezuela meet its monetary obligations and advance the country’s monetary sovereignty. The decision was likely based on the phenomenal rise in the values of cryptocurrencies like Bitcoin and Ethereum.
Venezuela is not the only country in the world that is currently going through a major cash crisis. Over the last decade or so, a few other countries from across the world have gone through similar situations, especially after having sanctions imposed on them by the United States. Let us take a look at some of the world’s most worthless currencies apart from the bolivar.
1) South Sudanese Pound
The South Sudanese economy, which also relies on oil for a major share of its revenue, has collapsed and spun out of control over the last year or so. The value of the South Sudanese pound against the US dollar is currently a quarter of what it was a few months ago.
2) Zimbabwean Dollar
The bloody tale of the Zimbabwean dollar is quite a well-known one among today’s economists and market watchers. The currency was demonetised in 2015 after it hit an exchange value of 35 trillion Zimbabwean dollar for USD 1. What’s interesting is that a Zimbabwean 100 trillion dollar currency note, which was first printed in 2009 and could buy nothing more than a loaf of bread, now goes for USD 100 each on eBay.
3) Somaliland Shilling
Even in this list, the Somaliland shilling has to be one of the least valuable, since it is not even legal tender in any other country or region outside of Somaliland. Currency exchange services are only provided by a few unofficial hawala agents operating in Somaliland and they typically offer 6,000 Somaliland shillings for USD 1. Since the largest currency note in Somaliland is 5,000 Somaliland shillings, which is less than USD 1 in value, people are forced to carry currency notes around in suitcases and trolleys.
4) Uzbekistani S’om
The Uzbekistani s’om is one of the world’s most worthless currencies as rampant inflation has completely wiped out is value over the years. The country’s government has been in denial about its currency and has refused to print higher value currency notes. As a result, people in Uzbekistan are often seen carrying cash around in plastic bags.
5) Sierra Leonean Leone
With the ebola epidemic and persistently low prices of crude oil across the globe, the Sierra Leonean economy has taken a beating over the last couple of years, with inflation rising to nearly 20 percent at the end of FY17, up from just 8.8 percent at the end of the previous fiscal year. As many as 10,000 leones amount to just over USD 1 and coins cost way more to mint than what they are worth.
6) Iranian RialFrom commanding an exchange value of 141 rials to the dollar in the 1970s, the rial has gradually lost value against the greenback. With Iran crippled by US sanctions earlier and a hostile Trump administration looking to antagonise the current Iranian regime, the rial is currently trading at over 32,000 rials for USD 1. Experts’ view is that the currency will continue losing its value and will become even more useless than it is today.