Watch: What is the weakest Arab currency against the dollar?

During the past fifty years, the gap between many Arab currencies and their foreign counterparts (especially the US dollar) has widened in an unprecedented manner that can be described as "collapse."

The Egyptian and Sudanese pounds, the Lebanese and Syrian pounds, the Yemeni riyal, the Iraqi, Tunisian and Libyan dinar, the Somali shilling, and the Mauritanian ouguiya have all lost a large proportion of their basic values ​​during the last five decades, which led to an increase in social pressures on the middle and poor classes in these countries.

As we can see in the attached data video, which shows the weakest currencies of the Arab countries against the dollar since the 1960s, the decline of the Somali shilling began since the beginning of the sixth decade of the last century, as the value of one dollar in 1960 was equal to about 7.14 shillings, but it began to gradually lose its value Until it collapsed completely in the past decade, then recovered a little, to record the dollar today in the range of 550 Somali shillings.

As for the Iraqi dinar, which in the mid-seventies was worth about 4 dollars, its value deteriorated after the war with Iran and the second Gulf War, then political turmoil and internal corruption, to collapse to about 1457 dinars to one dollar.

Despite this, the Iraqi dinar appears to be strong compared to the Lebanese pound, which reached about 1,500 pounds against the dollar (in the official market), and in some stages, the exchange rate of the dollar reached about 3000 Lebanese pounds, after the dollar was worth less than three pounds at the beginning of the eighties. .

At the bottom of the slope, there is no Arab currency that can compete with the Syrian pound's rapid decline. Its value collapsed from 3-4 pounds to one dollar in the 1980s to more than 2,500 pounds to one dollar, at a rate of decline that cannot even be calculated.

The Sudanese pound, whose value in the 1960s was about half a dollar and increased to 3 dollars against one pound in the 1970s, joined the collapsed group of Arab currencies, bringing the value of one dollar to about 446 Sudanese pounds.

As for the Yemeni riyal, whose exchange rate between the seventies and eighties was at the level of 4.5 riyals to one dollar, it collapsed in turn to exceed the value of one dollar 250 riyals.

And the Egyptian pound is not in the best condition. Over the past seven years only, the pound has lost about 59% of its value, and its value has decreased since the sixties and seventies, when the dollar was worth about 2.5 pounds only to about 19 pounds to the dollar today, while the exchange rate seems likely to decline further. With Cairo's tendency to borrow again from the International Monetary Fund.

With the exception of the Gulf countries, perhaps, the currencies of most Arab countries today are in a state of collapse or on the verge of collapse, as the value of the currency expresses the high demand for it, which is related to the volume of what is produced and exported by the country that owns the currency, and the exchange rate of the currency is related to its “balance of payments”, the more it increases The costs of imported goods against exports and sources of foreign currency, and the higher the proportion of foreign debt, and at the same time, the lower the foreign currency reserve, the greater the likelihood of a crisis and a depreciation of the local currency.

The state budget and its final account also give a strong indication. The higher the budget deficit, the more the state resorts to loans, the higher the debt-to-export ratio and the higher the debt payments, all of which threatens the value of the local currency, and threatens its deterioration.

The natural and inevitable result of the currency collapse appears to be the insane rise in the prices of imported and consumer goods, and the state may eventually resort to selling its assets or declaring bankruptcy if it is unable to pay its debts.

The only radical solution remains the transformation of the economies of those countries into productive economies that protect their currency with their local production and exports, without waiting for successive payments of loans to save them from the brink of collapse.

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Sources

1- The collapse of some Arab currencies.. What are the causes and repercussions?

2- Which Arab currencies will fall the most in 2022?

3- Lebanon is not the first.. 4 Arab countries suffer from the collapse of the currency.