Investor’s List: Countries with Fixed Currency Exchange Rates

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We’ve touched on the impact that currency risks can have on frontier market investments before, but countries with fixed exchange rates present a unique dilemma. On the one hand currencies are by definition stable, alleviating currency worries since FX volatility is near zero. On the other hand, they are susceptible to large one-off moves and de-peg risk. Investors in Venezuela experienced this firsthand last week when the country devalued its currency by 32%, from 4.3 VEB to 6.3 VEB per USD.

We scoured the web for a good list of countries that still use fixed currency rates and were left wanting. Existing ones out there contain outdated information, or are filled with currencies of small countries that are irrelevant even to frontier investors. This is why we have compiled a list of all countries that still maintain fixed currency exchange rates and have populations over 1 million (with some exceptions). By our count there are 36 relevant countries in all, listed below for future reference.

Interestingly the majority of these countries are pegged to the EUR (17 total), with the USD coming second (13 total). This will make things extra interesting if the Euro is ever broken up since many of these are themselves in a monetary union (pegged to another monetary union).

Africa is home to most of the fixed currency countries at 19, with 14 of them using the CFA franc that is pegged to the Euro and three pegged to the South African Rand (ZAR) as part of a Common Monetary Area. The Middle East is another bastion for fixed currency rates, with 7 countries all pegged to the USD. Nepal is the only country pegged to the Indian rupee, which given the volatile status of INR has increased talk of breaking away from this peg.

The full list of countries with fixed currency exchange rates, population greater than 1 million: (last updated Feb 2015)

Country Region Ccy Name Code Peg Rate Peg Ccy Rate Since
Bahrain Middle East Dinar BHD 0.376 USD 2001
Benin Africa West African CFA Franc XOF 655.957 EUR 1999
Bosnia and Herzegovina Europe Convertible Mark BAM 1.95583 EUR 2002
Bulgaria Europe Lev BGN 1.95583 EUR 2002
Burkina Faso Africa West African CFA Franc XOF 655.957 EUR 1999
Cameroon Africa Central African CFA Franc XAF 655.957 EUR 1999
Central African Republic Africa Central African CFA Franc XAF 655.957 EUR 1999
Chad Africa Central African CFA Franc XAF 655.957 EUR 1999
Cuba Central America Convertible Peso CUC 1 USD 2011
Denmark Europe Krone DKK 7.46038 EUR 1999
Dijibouti Africa Franc DJF 177.721 USD 1973
Equatorial Guinea Africa Central African CFA Franc XAF 655.957 EUR 1999
Eritrea Africa Nakfa ERN 15 USD 2005
Gabon Africa Central African CFA Franc XAF 655.957 EUR 1999
Guinea-Bissau Africa West African CFA Franc XOF 655.957 EUR 1999
Hong Kong Asia Dollar HKD 7.75-7.85 USD 1998
Ivory Coast Africa West African CFA Franc XOF 655.957 EUR 1999
Jordan Middle East Dinar JOD 0.709 USD 1995
Lebanon Middle East Pound LBP 1507.5 USD 1997
Lesotho Africa Loti LSL 1 ZAR 1980
Mali Africa West African CFA Franc XOF 655.957 EUR 1999
Namibia Africa Dollar NAD 1 ZAR 1993
Nepal Asia Rupee NPR 1.6 INR 1993
Niger Africa West African CFA Franc XOF 655.957 EUR 1999
Oman Middle East Rial OMR 0.3845 USD 1986
Panama Central America Balboa PAB 1 USD 1904
Qatar Middle East Riyal QAR 3.64 USD 2001
Republic of the Congo Africa Central African CFA Franc XAF 655.957 EUR 1999
Saudi Arabia Middle East Riyal SAR 3.75 USD 2003
Senegal Africa West African CFA Franc XOF 655.957 EUR 1999
Swaziland Africa Lilangeni SZL 1 ZAR 1974
Togo Africa West African CFA Franc XOF 655.957 EUR 1999
United Arab Emirates Middle East Dirham AED 3.6725 USD 1997
Venezuela South America Bolivar VEB 6.3 USD 2013

 

Updated Feb 2015:
– reordered in alphabetical order
– removed Latvia and Lithuania, which joined the Euro in 2014

24 COMMENTS

  1. Excellent job! I could not find one concise list with pegs that comes close to how neatly and nicely you have put this one together. I am sure it was a lot of work. thank you!

    • Hi Terry, China releases a fix midpoint everyday and has a trading band of +/- 1% around it. However, the fix midpoint moves everyday so the band is moving (unlike in Hong Kong which is included in the list above), and the currency has strengthened significantly over the past few years. There has also been much talk of the band widening further as they move towards internationalization of the currency, so in most regards China does not have a fixed exchange rate.

        • Hi Harald,

          Thanks for your question!

          Argentina and China are in very different situations, but despite heavy central bank intervention, neither of them can be considered true pegged currencies.

          Argentina has both an official and an unofficial (Dolar Blue) rate, but the official rate has been moving with USDARS moving almost 34% higher since the beginning of Jan 2014.

          China has a trading band (currently +/- 2%) around a daily midpoint that is set everyday. That midpoint is always moving so that is why we do not consider China a pegged currency either.

          As long as the official exchange rate or official trading band is moving around, we do not consider the currency pegged.

    • Thanks very much for your comment. You are absolutely correct, and we have made the change to reflect that.

      Thank you for stopping by.

    • Kuwait is pegged to a basket of currencies and not to the USD, and it does fluctuate so we did not include it. In general this list does not include countries that peg their currency to a basket of other currencies, like the Singapore dollar, since the currency itself still moves and the composition of the baskets usually change as well.

    • Thanks! With a population of 330,000, we didn’t include Belize on this list but will strongly consider it for the future.

  2. this is a good article. I’m from ghana and we have the worst currency in the world. i hope the politicians here can get some sense and peg the cedi to a foreign currency,

    • Best way to understand it is to read up on Currency’s Impossible Trinity: en.wikipedia.org/wiki/Impossible_trinity

  3. Hi thanks for the article, where can I find the list with the Countries with Floating and Intermediate exchange rates??

    • Almost every other currency is floating and deliverable, and we have put many of the intermediate (I’m assuming you mean floating but within a band) currencies on this list already.

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