Strongest Currencies in Africa and Globally for Fighting Inflation

Strongest Currencies in Africa and Globally for Fighting Inflation

Inflation has long been one of the main drivers for individuals and institutions to enter the markets and trade and invest their spare cash holdings. While the rates of inflation tend to be modest over the long run, certain external factors, coupled with monetary policy changes, can cause inflation to spike, both locally and internationally. 

When assessing the currencies in Africa and globally that can help investors fight inflation, it is important to consider the currency strength meter, which is an algorithm-based technical indicator that measures the strength of an individual currency particularly against some of the major currencies, such as the euro, US dollar, British pound, etc. 

Tunisian dinar (TND)

Starting off our list, the Tunisian dinar has benefited from the relative stability of the country over the past few years, with strong economic growth, tourism revenues and foreign currency reserves, Tunisia greatly utilizes its strategic position in North Africa on its road to further development.

With a GDP per capita of less than $4,500, Tunisia is far from the most advanced economy in Africa, but the Tunisian dinar has remained resilient against the US dollar, only losing positions as the dollar interest rates started to rise.

The USD/TND exchange rate has hovered around the 3.00-3.15 range for most of 2023 and 2024.

Moroccan Dirhams (MAD)

Another North African country with attractive tourism revenues and a resilient currency, Morocco’s economy has been growing at a steady pace over the past few years, reaching a GDP per capita figure of $4,000. 

While industry in Morocco tends to be limited, the country benefits from its access to the Atlantic ocean and proximity to the European continent, which has also meant that Morocco is actively involved in major energy deals and infrastructure projects between the North African region and the European Union, which helps strengthen the Moroccan dirham by boosting euro reserves for the central bank. 

Botswana pula (BWP)

One of the most stable and richest countries in the sub-Saharan region of Africa, Botswana has long been a marvel of economists around the world. With a very small population of less than 2.5 million people and a GDP per capita of over $8,000, Botswana is one of the richest nations in all of Africa. With robust mining and tourism sectors, the Botswana pula has emerged as one of the most reliable currencies in the region, which comes at a stark contrast to neighboring Zimbabwe and even South Africa in recent years. 

With a growing consumer base and economy, coupled with resource wealth, the Botswana pula is likely to remain as one of the safest currency options in the sub-Saharan region for years to come. 

Swiss franc (CHF)

For those with a knack for the more traditional safe haven assets, the Swiss franc has long been one of the hallmarks of forex market stability.

With an incredibly stable and secure economy, diverse value-added industries and renowned banking system, Switzerland is the prime destination for foreign nationals to safeguard their wealth and assets, which affects the performance of the Swiss franc, which is widely regarded as one of the most reliable currencies in the world, with an exchange rate that has been nearly identical with the US dollar for most of its recent history. 

However, this reliability also means that interest rates in Switzerland are notoriously low and term deposits and Swiss bonds are less attractive in a period of strong dollar performance. 

Conclusion

While inflation continues to be an issue for consumers and investors alike, new alternatives can be found among African economies, who are continuing to grow as tensions die down and greater political stability seems tangible. North African economies, such as Tunisia and Morocco, as well as Botswana, the most stable country in the sub-Saharan region, present ample opportunities for forex investors.

For the more conservative-minded investors, the Swiss franc is the tried and true safe haven asset to fall back on during periods of uncertainty in the global markets.