Image Source: Unsplash

The 2022 year has certainly been extremely tough for the majority of investors since we have experienced all sorts of events that have never happened before. This is mainly induced by the Covid-19 lockdown and the Russia-Ukraine war that emerged at the beginning of the year. Therefore, exchange markets have seen major volatility in terms of currency prices and it has become very difficult for a vast number of investors to make proper decisions. Even experts are struggling to give out definitive statements when it comes to currency price alterations since this process mainly depends on the economic and political events occurring in the world. 

In this guide, we are going to point out some of the most popular currencies that lost the most value against the USD in 2022. Given the fact that the overall US economy has been recovering rapidly since May 2022 and the Federal Reserve started to take control of it, we have seen a drastic surge in the US dollar. According to several experts, it might even increase further in the upcoming years since the Federal Reserve will begin to constantly raise interest rates. It is a well-known fact that central banks carry out monetary measures in order to establish exchange rates and some analysts believe that the Fed will absolutely increase interest rates in 2022. 

Before we jump to the main topic of this article and provide the list of FX pairs with the highest volatility, we would like to talk about the importance of the US dollar in general and how it influences the rest of the world. Due to the fact that the USA has the largest economy in the world, you will see that the majority of commodities are priced in US dollars and this country provides a lot of international trade links. Thus, it should come as no surprise that the value of the USD has an enormous influence on other currencies and economies.

When USD gets weakened, it is good news for other countries which import products from the USA since they will become much cheaper. On the flip side, when other currencies lose value against the USD, then US citizens have a chance to benefit greatly in those countries. As you can tell, the price devaluations have pretty much the same effect for every currency and it induces a series of similar events, but the main difference is that the US dollar is the main currency in the world. 

One of the surprising events that took place in 2022 was the fall of the EUR against the USD as they pretty much became equal in price which is called parity in the financial world. As we have already noted, the main reason behind such a drastic fall in EUR was the war between Russia and Ukraine which has caused major implications for the whole continent. As a result, for the first time in a lot of years, EUR and USD have drawn similar numbers which will continue for some time until the situation is resolved. 

When it comes to the Canadian dollar, major banks are expecting it to weaken against the US dollar in the upcoming year. As we all know the main resource that Canada exports are oil and its price is expected to fall dramatically in 2022. As a result, the value of the Canadian dollar will be hurt and it will be devalued against other currencies. On the other hand, the growth of the US economy will stabilize the dollar and make it significantly stronger than the Canadian currency at the moment! 

We have to note that the most noticeable downfall was seen in the relationship between Indian Rupee and the US dollar. The depreciation has been lower compared to other global currencies that have driven both the RBI and the government to carry out necessary measures. They have established new laws in order to attract foreign inflows and increase gold imports significantly. The rupee has drawn one of the lowest numbers against the USD recently which is a subject of major concern for the Indian government and they are trying to increase interest rates as well as the attractiveness of keeping Indian Rupees for residents and non-residents. 

As for the Japanese Yen, it has also been one of the worst-performing major currencies this year. The main reason is the cheerful mood in the overall market after the recovery of the Covid-19 pandemic since this process often induces a fall in demand for the Yen. This means that as long as the upbeat mood in the market continues in 2022, the Yen will retain its downfall as well and will get significantly weaker against the US dollar. The Bank of Japan has not yet started when it will increase interest rates, so the overall picture is not entirely clear and nobody knows what the future holds for the Yen.

More By This Author:

What Should Investors Know About Stock Returns?
Dow And Wall Street Suffer - What Is Happening?
Euro Drops Once Again: What Should Investors Consider?