Worldwide Impact

In late February 2022, Russia invaded Ukraine by means of airstrikes and infantry. This major conflict has driven several countries’ currencies to depreciate as political stability decreased in the area. Countries involved in trade with Ukraine or Russia were affected. Developing economies around the world were also negatively impacted as it is believed that investors are looking to move their money in safer, less volatile assets such as USD and gold. The expectation of a FED interest rate hike later this year also impacted the USD’s relative value along with foreign investment. Some countries such as Angola and Venezuela are among the few that have seen appreciation from an increase of exports and rising oil prices.

Currencies Losing Value against the USD:

MAD - Moroccan Dirham

The depreciation of the Moroccan dirham is largely related to the strengthening U.S. dollar, which has benefited from sanctions and the expectation of future interest rates. The U.S. Federal Reserve is expected to raise the interest rate, while Morocco will maintain its own rate.

ISK - Icelandic Krona

The Icelandic krona fell slightly after consecutive months of appreciation due to market uncertainty and an increase in expected inflation for the month of March. The Central Bank of Iceland sold foreign currency to the market to stabilize the exchange rate. Investors are more risk averse and invest in less volatile assets, which may impact the krona.

ZWL - Zimbabwe Dollar

The Zimbabwean dollar depreciated from its lack of favorability in the domestic market. Most sellers prefer to accept USD in the marketplace, which has forced people to exchange their ZWL to USD to complete transactions.

GHS - Ghanaian Cedi

The Ghanaian cedi reportedly depreciated over 10% in 2022 according to the Bank of Ghana. The main reasons are the high demand for foreign currencies and the increased sales of international bonds. There is a shortage of foreign currency and inflation is also a contributing factor. After many calls for an interest rate hike, the Bank of Ghana increased the rate to 17%.

LKR - Sri Lankan Rupee

The Central Bank of Sri Lanka set a new exchange rate limit of 230 rupees per dollar, leading directly to the depreciation of the currency. Rising debt and shrinking foreign reserves encouraged the bank to depreciate the currency to encourage remittances that may help generate foreign currency. With greater reserves, the IMF hopes to find Sri Lanka a candidate for a loan program and help to restructure its debt. Sri Lanka must repay 4 billion USD this July, including a 1-billion-dollar international bond.

RUB - Russian Ruble

The United States and its allies placed economic sanctions on Russia following the invasion of Ukraine. These sanctions include the banning of exports from Russian firms and cutting off Russia’s Central Bank from international reserves. Additionally, the United States and its allies pushed banning Russian financial institutions from the SWIFT messaging network that is linked with the global banking system. Russian oligarchs were impacted when their assets were frozen. The Russian Stock Exchange closed after the invasion started and remained closed until a partial reopening on March 24, 2022. The Russian ruble fell 30% after the financial institutions’ ban from SWIFT and has heavily impacted the buying power of Russian citizens.

LPB - Lebanese Pound

The Banque du Liban decided to apply the Seyrafa rate for international transactions. This was announced to match the official and parallel market rate. Annual inflation continues to rise, and the poverty rate has reached over 78%.

Other Countries Affected by the Russia-Ukraine Conflict:

This month many country’s currencies depreciated due to the Russian invasion in Ukraine. Ultimately, these currencies depreciated due to lack of confidence and security in these countries. Their proximity and close economic ties are the primary reasons for the loss in investor confidence. Several factors that are impacted include trade, remittances, tourism, and inflation. Foreign reserves were gathered by many European countries including Hungary, Poland, Czech Republic, and even Romania to cushion the expectation of further currency depreciation. Below are some currencies affected by the Russian-Ukraine conflict.

UAH – Ukrainian Hryvnia

ALL – Albanian Lek

CZK - Czech Koruna

AMD - Armenian Dram

TRY – Turkish Lira

PLN - Polish Zloty

GEL - Georgian Lari

HUF – Hungarian Forint

TJS - Tajikistan Somoni

KGS - Kyrgyzstani Som

KZT - Kazakhstani Tenge

BYN - Belarusian Ruble


Currencies Gaining Value against the USD:

VES - Venezuelan Bolivar

Venezuela’s Vice President Delcy Rodríguez talked about the bolivar’s recent performance before Venezuela’s National Assembly in late March. He said the bolivar’s performance has showed gradual improvement. Other positive actions include President Maduro’s increase of the minimum wage to 126 bolivars and the National Assembly’s proposed bill to tax crypto and foreign currency transactions between 2% and 20%.

AFN - Afghanistan Afghani

The afghani strengthened against the USD due to approved financial aid for the country. The World Bank backs 1 billion USD from Afghanistan’s frozen assets to be redistributed through UN agencies and international NGOs to help with the humanitarian crisis. The humanitarian crisis has not improved and, though the afghani appreciated, many people are reporting that food prices have stayed the same. Other factors that affect economic conditions include the lingering effects of the COVID-19 pandemic, health care shortages, and drought.

AOA - Angolan Kwanza

The increase in the demand for oil continued to push the Angolan kwanza’s value against the USD this month. The AOA by far has been the worlds’ top performing currency for other reasons as well, including increased credit ratings and a slew of interest rate hikes. This economic expansion also helped Angola make key changes in its energy industry. Tax incentives towards oil exploration, decreasing cost of oil production, and the restructuring of the National Oil company Sonangol are all examples of how Angola has sustained growth.

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