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 Existing ones out there contain outdated information, or are filled with currencies of small countries that are irrelevant even to frontier investors.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
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!
Thanks! We couldn’t find a good list either, hence this post. Glad it helped!
Thank’s a lot for this list!
Regards from Belgrade, Serbia!
Bermuda has a fixed rate according to Wikipedia.
[…] understand that the whole region seems to be moving towards unified currencies with West Africa and Central Africa already using the CFA Franc, and the West African contingent working to adopt a new currency, the […]
Doesn’t China have a fixed exchange rate?
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.
Hello Shalifay, are we considering Argentina to be under the same situation as China?
Cheers
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.
[…] be nothing to stop an independent Scotland “pegging” a Scottish pound to the British pound. Many countries, including many successful ones, peg their currencies either to the Dollar or the Euro. This […]
Brunei Dollar have been pegged to Singapore Dollar for more than 40 years…
Thanks very much for your comment. You are absolutely correct, and we have made the change to reflect that.
Thank you for stopping by.
Thank you for the list it was of great assistance.
You missed Kuwait. It also has fixed value with US $
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.
Belize is pegged to USD at a rate of 2 to 1.
Thanks! With a population of 330,000, we didn’t include Belize on this list but will strongly consider it for the future.
Latvia has Euro since 1. January 2014 and Lithuania from 1. January 2015.
Thanks, we’ve updated our list to reflect the changes!
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,
Hi, could you explain weakness & benefit of Pegged currency ?
Best way to understand it is to read up on Currency’s Impossible Trinity: en.wikipedia.org/wiki/Impossible_trinity
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.
Where did you find the data since which year Eritrean Nakfa pegged to US dollar? Would be amazing to obtain it !