- December 10, 2021
- Posted by: Ato
- Category: Economics
A lot of Africans are quite captivated by any conversation that has to do with exchange rates, and that’s understandable. The reason is simply because exchange rates directly affect all of us.
As you may well know, many African currencies are weak. And seeing as most African countries import a lot of the essential goods and services needed for daily living, exchange rates play a role in determining the prices of goods and services across African markets.
In view of this huge interest in exchange rates, Business Insider Africa has decided to occasionally bring you special content on the subject matter. In October, we brought you a report about the African currencies with the lowest exchange rates. That article elicited many reactions.
And then in November, we published the 10 African currencies with the highest exchange rates against the dollar. That too elicited enormous reactions from our readers. For today, we are focusing on the top five currencies with the highest exchange rates against the dollar in West Africa.
In order to avoid any form of confusion, it’s important to explain that this article is only talking about nominal exchange rates. In other words, we are not implying (by any means) that the five currencies featured herein are the most valuable in West Africa. For context, quoted below is Investopedia’s definition of nominal exchange rate:
“The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency. In economics, the NEER is an indicator of a country’s international competitiveness in terms of the foreign exchange (forex) market.”
Having said that, it’s important to also explain that we chose the dollar as the benchmark currency because it is currently the most used currency during international trade. Also, in order to select the five West African currencies with the highest exchange rates, we converted the sum of 1000 in each of these currencies to the dollar.
Fair warning: Exchange rates are very volatile. So, the figures may have changed by the time you are reading this article.
Five West African currencies with the highest exchange rates against the dollar
- Ghanaian Cedi: Ghana has the highest exchange rate against the dollar in West Africa. Converting GHS1000 would give you $161.75. Now, this does not necessarily mean that Ghana has the most valuable currency in West Africa. As a matter of fact, the country had in 2007, re-denominated its currency such that GHS10, 000 became equivalent to Gh1 Cedi. The Bank of Ghana had explained that the re-denomination became necessary for the sake of statistical convenience.
- Mauritania’s Oguiya: The second West African currency with the highest exchange rate against the dollar goes to Mauritania. When we converted Mru1000, we got $27.51.
- Gambian Dalasi: This is the third West African currency with the highest exchange rate against the dollar. Converting GMD1000 gave us $19.08.
- Cape Verdean Escudo: The Cape Verdean currency has the fourth highest exchange rate against the dollar in West Africa. When converted, CVE1000 would give you $10.23.
- Liberian dollar: Liberia has the fifth highest exchange rate against the dollar in West Africa. Checks by BI Africa showed that LRD1000 converted to $7.04.