What Is the Weakest Currency in the World in 2025?

According to the latest exchange rate, the Lebanese lira has become the weakest currency in the world, ranking first among the weakest currencies in Arab and globally.

The lira's depreciation surpasses historically weak currencies such as the Iranian rial, the Vietnamese dong, the Sierra Leonean leone, and the Uzbekistani som. Regionally, it has performed worse than the Syrian pound, Iraqi dinar, Sudanese pound, and Yemeni rial, making it the most devalued currency in the Middle East.

The collapse of the Lebanese lira reflects the country's deep economic crisis, political instability, and financial mismanagement. The lira's decline did not happen overnight, but from years of fiscal irresponsibility, a lack of economic reforms, and a heavily industrialised economy.

Why Is the Lebanese lira Currently the Weakest Currency in the World?

1) The Role of the Central Bank and Excessive Money Printing

One of the primary reasons for the collapse is the interventionist policies of the Banque du Liban (BDL), the country's central bank. To manage the country's financial crisis, the central bank has repeatedly printed money and injected excess liquidity into the market. However, this has been done without adequate backing from foreign reserves or economic production, leading to rapid currency depreciation.

Moreover, the excessive supply of Lebanese lira in the market and limited demand have driven its value downward. Without sufficient foreign currency reserves, the government has been unable to stabilise the exchange rate, leading to continuous fluctuations. The more money that is printed, the less valuable it becomes, pushing the exchange rate further into freefall. This phenomenon is a classic example of hyperinflation, where an unchecked increase in the money supply erodes purchasing power at an uncontrollable rate.

2) An Import-Dependent Economy and the Dollar Crisis

Lebanon relies heavily on imports, with over 80% of its goods coming from abroad, including essential items like fuel, food, and medical supplies. This dependence on foreign goods means businesses and consumers need US dollars to pay for imports. However, as the economic crisis deepened, the supply of hard currency in Lebanon diminished, creating a severe dollar shortage.

As demand for the US dollar skyrocketed while supply remained low, the value of the Lebanese lira plummeted. Businesses and individuals were forced to turn to the parallel market (black market) to obtain dollars at exorbitant rates, worsening the crisis. The disparity between the official exchange rate and the market rate grew wider, further undermining confidence in the lira. The inability of the central bank to supply enough dollars to meet market demand has ensured that the lira remains in a state of continued devaluation.

3) Runaway Inflation, Weak Economic Growth and Rising Unemployment

The Lebanese economy has experienced hyperinflation, with inflation rates surpassing 200% since 2019. The steep price rise has made everyday necessities unaffordable for large segments of the population, reducing the overall standard of living. As inflation soared, wages failed to keep pace, leading to a severe decline in purchasing power.

In addition, Lebanon's economic crisis has led to a severe contraction in GDP, soaring unemployment rates, and a shrinking middle class. The financial sector, which once played a crucial role in Lebanon's economy, has been devastated by banking collapses and informal capital controls. Since 2019, banks have restricted withdrawals and transfers, leaving depositors unable to access their own savings. This erosion of trust in the banking system has led to a cash-based economy, further complicating efforts to stabilise the financial sector.

The lack of economic opportunities has forced many young and skilled Lebanese professionals to migrate for better prospects abroad. This brain drain reduces the country's long-term economic potential, making recovery even more difficult. Foreign investment has also dried up, as investors are wary of Lebanon's unstable political climate, lack of reforms, and financial mismanagement. The resulting economic stagnation means little demand for the Lebanese lira, reducing its value further.

Attempts at Stabilisation and the Change of Leaders

Since Wassim Mansouri took over as acting governor of Banque du Liban (BDL) in July 2023, the rapid depreciation of the Lebanese lira has slowed. Mansouri has adopted a cautious approach, refusing to lend money to the government and advocating for stricter financial discipline. His policies have contributed to 12 months of exchange rate stability and a modest recovery of foreign currency reserves above $10 billion.

Mansouri's strategy resembles an "incomplete" currency board, where the exchange rate is maintained at a stable level without formal law backing. However, his approach has not been institutionalised, meaning that any shift in central bank leadership or government policy could lead to renewed volatility.

In addition, Lebanon appointed Nawaf Salam as the new prime minister-designate in early 2025. Salam has pledged to implement comprehensive reforms aimed at rebuilding the economy, combating corruption, and restoring public trust. However, the path to recovery remains fraught with challenges, including the need for substantial international aid and the resolution of ongoing political tensions.

The Offical Ranking of the Weakest Currencies in the World in 2025

1) Lebanese Pound (LBP)

• 1 USD = 89,876.6 LBP

• Factors: Excessive Money Printing, Runaway Inflation and Weak Economic Growth.

2) Iranian Rial (IRR)

• 1 USD = 42,110.1 IRR

• Factors: Economic sanctions and political instability.

3) Vietnamese Dong (VND)

• 1 USD = 25,583.5 VND

• Factors: Transition from a centralised to a market economy.

4) Sierra Leonean Leone (SLL)

• 1 USD = 22.778 SLE

• Factors: Economic challenges and political instability.

5) Lao/Laotian Kip (LAK)

• 1 USD = 21,728 LAK

• Factors: Long-term low valuation since its introduction in the 1950s.

6) Indonesian Rupiah (IDR)

• 1 USD = 16,590.3 IDR

• Factors: Declining foreign exchange reserves and reliance on commodity exports.

7) Uzbekistani Som (UZS)

• 1 USD = 12,958.6 UZS

• Factors: Low economic growth and high inflation.

8) Guinean Franc (GNF)

• 1 USD = 8,659.06 GNF

• Factors: Corruption and political unrest.

9) Paraguayan Guarani (PYG)

• 1 USD = 7,995.79 PYG

• Factors: Economic collapse, high inflation, and corruption.

10) Malagasy Ariary (MGA)

• 1 USD = 4,679.15 MGA

• Factors: Natural disasters and political instability.

Conclusion

While the Lebanese lira is the weakest currency in the world in 2025, the other weakest currencies in the world highlight the deep economic struggles many nations face, including hyperinflation, political instability, low foreign exchange reserves, and weak governance.

Although weak currencies often signal economic distress, they also present opportunities for reform. Countries implementing monetary policy improvements, fiscal discipline, and structural economic reforms can stabilise their currencies and rebuild investor confidence.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.