Best Performing Currencies of 2022: The Ultimate Guide

This article will discuss the best-performing currencies of 2022, which led the global trade, and how different currencies in the world fared compared to the US dollar, which is considered the base currency for many currency indices.

Why would anyone be interested in knowing the strongest currency in the world? Because the state of a currency says tons about a country’s economy and political situation and casts a strong prediction about how the next year will look for the country.

Moreover, it’s one of the best ways for an investor to judge whether investing in a particular country is safe.

In essence, if a country is safe, politically and economically stable, and takes measures to safe-guard and boost foreign exchange coming into the country, it will reflect positively upon the country’s legal tender.

At Nomad Capitalist, we keep an eye on everything that makes a country investment-friendly, including its currency. So, if you want to expand your investment portfolio or move your business offshore but are unsure about the destination, get in touch with us. We’ve helped thousands of HNWI clients diversify their assets by going where they’re treated best, and we would love to do the same for you.

The Illusion of “Safe” Currencies

What comes to your mind when you think of a safe currency? The US dollar or the British Pound have historically been seen as stable, until history proved the notion of stability wrong. 

Usually, when people think of the safest and most valuable currencies, they think of the west. But is that accurate? Well, for starters, the most valuable currency in the world right now is the Kuwaiti Dinar, a Middle Eastern legal tender.

Let’s take the example of the British Pound. It is not a weak currency by any measure but has experienced one of the worst periods of depreciation in 2022. The reason? Changing leaders (five prime ministers in six years!), a disastrous “mini-budget” and the ongoing backlash over Brexit, are just some of the contributory factors.  

The west is slowly losing its stronghold across many domains. No currency is an island – all are under constant fluctuations, big or small, because of several influences. The western currencies aren’t immune to these changes either.

The bottom line? Western currencies might not be as stable as you think, so it’s high time to diversify. If you’re uncertain where or how to start, reach out to us, and we can offer you a holistic strategy focused on asset diversification.

As for the strongest currencies of 2022? We’re certain some won’t surprise you, but others no doubt will. 

US Dollar (USD)

Let’s start with the obvious. The reason for calling the USD obvious isn’t because it’s the strongest or most valuable currency but because it’s the default trading currency for many countries worldwide.

USD is the world’s primary reserve currency. Moreover, most commercial and central banks hold it. It is also the most traded currency globally, accounting for nearly 88.3% of daily trades in the forex market. The US dollar is also part of some of the major forex pairs like USD/EUR (Euro), USD/CAD (Canadian dollar), USD/JPY (Japanese Yen), USD/CHF (Swiss Franc), etc.

In 2022, the USD climbed more than 14% against the Japanese yen, 12% against the British Pound Sterling, and 7% against the euro, New Zealand, Canadian, and Australian dollar.

2022 was a pretty strong year for the US Dollar, in which it appreciated over 12%, hitting a two-decade high in September of 2022.

One of the primary reasons for such a dramatic spike was the increase in interest rates approved by the Federal Reserve to battle inflation. The dollar’s performance is even more striking when compared to the poor performance of other asset classes like stocks, bonds, cryptocurrencies, etc.

USD having one hell of a year was good news for US consumers, especially those fond of imported items. However, it may mean bad news for emerging countries weakening the value of their currencies against the US dollar, triggering a sudden rise in debt payments, cost of imports, etc.

Swiss Franc (CHF)

The Swiss Franc is the national currency of Switzerland and is also the official currency of Liechtenstein. Just like the USD, CHF has always been favored by investors and entrepreneurs as a safe-haven currency – one they can depend on in times of political, social, or economic turbulence.

Currently, $1 equals 0.89 CHF, and EUR 1 equals 0.99 CHF. The Swiss Franc is the 7th most-traded currency globally, and the USD/CHF is among the ten most actively traded forex pairs.

In 2022, the Swiss franc climbed to its highest level against the US dollar. The Swiss National Bank bought foreign currency assets and gradually spiked interest rates to stabilize the CHF.

Regarding securing investments, the Swiss Franc is still one of your safest bets as it’s more valuable than both the US dollar and Euro and lacks the volatility associated with the US dollar and British Pound Sterling.

Cayman Islands Dollar (KYD)

The Cayman Islands dollar is the official currency of the Cayman Islands, a British overseas territory (BOT) in the Western Caribbean.

Currently, KYD 1 equals $1.20. As evident from the exchange rate, KYD is the strongest Caribbean currency.

The Cayman Islands is a well-established jurisdiction favored by investors, entrepreneurs, and digital nomads worldwide for its tax-friendly laws, favorable business environment, and breathtaking natural beauty. However, one attribute that sets the Cayman Islands apart from its Caribbean tax-friendly contemporaries is its excellent quality of life (owing primarily to its status as a BOT).

The Cayman Islands is an excellent second citizenship and residency option owing to its strong currency, stable economy, high investment potential, and more.

Kuwaiti Dinar (KWD)

The Kuwaiti Dinar is currently the strongest currency in the world. Currently, 1 KWD equals $3.25. Situated in Western Asia, Kuwait is a small country between Iraq and Saudi Arabia. 

Its strongest currency is not the only distinct attribute it boasts. The country has no personal income tax, is highly stable and one of the most prosperous economies in the world, and has a stable political landscape. It’s also one of the safest regions in the world.

Moreover, its central bank has an A+ rating from Fitch, marking Kuwait as one of the safest jurisdictions to invest in.  

Singapore Dollar (SGD)

In the US dollar section of this article, we mentioned that USD had a great 2022 and how that affected emerging countries badly. Asian countries were among the jurisdictions heavily affected by a strong US dollar, with the Japanese Yen falling 25% and the Thai Baht losing 13% in 2022.

However, the Singapore dollar held steadfast against the rising US dollar in 2022, falling only 4% in 2022. Currently, $1 equals 0.74 SGD.

According to the Heritage Foundation, Singapore is the world’s freest economy. The country also holds a AAA rating from Moody’s and Fitch, making for a highly stable, secure, and profitable investment jurisdiction.

The West Isn’t Always the Best

“The West is the Best” has been the mantra of investors for many decades, but not anymore. The first two decades of the 21st century have been instrumental in developing many non-western countries, and many have come out of the transformation offering better financial and personal solutions to individuals worldwide.

Today, Eastern European, Asian, and Caribbean countries offer far more financial liberty, luxurious lifestyle, and investment opportunities than their Western contemporaries, often at a fraction of the tax rate imposed by western nations.

The euro’s struggles following the 2008 financial crisis and British pound tanking following the Truss “mini-budget” are primary examples of how the most stable regions in the world can take a nosedive during economic turmoil, threatening your investments.

That’s why, at Nomad Capitalist, we advise people to go where they’re treated best – a country that best serves their needs, protects their assets, and respects their privacy. If that’s your vision for 2023, contact us and let us set the wheels in motion.

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