What currencies are experiencing the most volatility in 2021?

    Jan 28, 2021 @ 06:45 AM / by Zenab Tavakoli

    Stock market price drop display-1

    Economic turbulence and currency volatility

    2020 proved to be a year of unprecedented social, political, and economic turbulence. Though the onset of the COVID-19 vaccine rollout and the change of Administration in the U.S. have inspired some hope that a return to “normal” life is possible in the foreseeable future, many markets remain turbulent.

    One change of particular note is that Cuba is ending their dual currency system and began withdrawing the Cuban Convertible Peso (CUC) from circulation as of January 1, 2021. Going forward, the Cuban Peso (CUP) will be the country’s only official currency.

    Below are summaries of the month’s rate changes over 3.5% taken from AIRINC's review last week. For up-to-date figures, please reach out to your client engagement representative or click here to reach our inquiries team now.

     


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    Currencies Losing Value against the USD

    VES — Venezuelan Bolivar Soberano

    The Venezuelan bolivar continues its years-long trend of depreciation. Increased dollarization, excess liquidity, and general financial mismanagement have all contributed to the constant drop in the currency’s value.

     

    LYD — Libyan Dinar

    For the past two years there have been two official exchange rates, one for public sector transactions and another for private commercial transactions. However, in December 2020, the board of the Central Bank of Libya met for the first time in six years and agreed to a unified rate, effective January 3.

     

    HTG — Haitian Gourde

    Last year witnessed the Haitian government’s efforts to keep their currency at an abnormally strong level, which failed to bring down prices as hoped. Instead, it made both local and hard currency harder to come by, and exacerbated poverty in the country. The government’s tactics to maintain the rate included selling off limited foreign reserves and allocating budgetary funds to simply print more money. These efforts are unsustainable, and the Haitian gourde has begun to see correction from this artificial appreciation over the past two months.

     

    ARS — Argentine Peso

    Argentina is in a state of near-constant financial crisis, with recurrent economic collapses and defaults on sovereign loans, accompanied by hyperinflation and regular devaluation of the currency.

     

    IQD — Iraqi Dinar

    Iraq devalued their currency by approximately 25% in late December.

     

    Currencies Gaining Value against the USD

    TRY — Turkish Lira

    In an effort to stem inflation and defend the value of the lira, Turkey’s Central Bank has raised interest rates for two months in a row and is considering doing so for a third. Further, Turkey has recently signed a free trade agreement with the UK, which has also increased interest in the TRY.

     

    NOK — Norwegian Krone

    The Norwegian economy has been notably resilient during the COVID-19 pandemic, due in part to its $1.3 trillion wealth fund. Norway’s vaccine rollout has also been relatively fast. The Norges Bank announced that it would not yet raise interest rates, but that it expects to by 2022, indicating confidence that the pandemic will be under control by the end of the year at least.

     


     

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    Listen | Partner | Deliver.  For over 60 years, AIRINC has helped clients with the right data, cutting-edge technology, and thought-leading advice needed to effectively deploy talent worldwide. Our industry expertise, solutions, and service enable us to effectively partner with clients to navigate the complexity of today’s global mobility programs. As the market continues to evolve, AIRINC seeks innovative ways to help clients address new workforce globalization challenges, including mobility program assessment metrics and cross-border talent mobility strategy. Our approach is designed with your success in mind. With an understanding of your goals and objectives, we ensure you achieve them. Headquartered in Cambridge, MA, USA, AIRINC has full-service offices in Brussels, London, and Hong Kong. Learn more by clicking here.

     


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    Topics: Currency Volatility, Hardship, foreign currencies, Global Mobility, Hardship Evaluations, Currency Devaluations, Insights and Experience, Coronavirus, COVID-19, COVID-19 Recovery

    Zenab Tavakoli

    Written by Zenab Tavakoli

    Zenab joined AIRINC in 2013 as a surveyor, and later research coordinator. As part of the research team, she traveled to over 70 countries. In 2021, she transitioned into the role of data analyst. She received her B.A. in Anthropology and French from Harvard College. Zenab speaks English, French, and Spanish, as well as some German, Norwegian, and Italian. She is based in Cambridge, MA.