As the exchange rate for the United States to the Liberian dollars skyrockets in the country with no action from the Central Bank of Liberia (CBL), members of the House of Representatives (the National Legislature) have joined the rest of the citizens who are directly affected to raise concern over the skyrocketing of the exchange rate in the country.
Prior to the ascendancy of President George Weah as President of the country, the exchange rate of the United States dollars to the Liberian dollars has increased from LRD$133.00 to US$1.00 and it is currently LRD$150.00 to US$1.00.
This has resulted into the hike in the prices of basic commodities in the country. This includes transportation, petroleum, rice, cement among other essential goods on the Liberian market.
Representative Jimmy W. Smith’s Letter
Based on what he has observed in the country, Montserrado County electoral district two Representative Jimmy W. Smith has written the plenary of the House of Representatives expressing concern over the high exchange rate in the country, particularly the United States Dollars.
“It will astonish you to note that our foreign exchange rate on the Liberian market is now US$1.00 to LRD$149.00 which means the current exchange rate on our local market is now 149,” he said.
Representative Smith reminded his colleagues that as a result of this upward unstable increment in the exchange rate, the people of Liberia no longer have a fair understanding of the market including prices of commodities and transport fare on a daily basis which is serving as a serious hindrance to their daily lives.
“Therefore, I am constraint to ask for your indulgence for authorities at the Central Bank of Liberia and the Ministry of Finance and Development Planning to appear before this august body and give reason for this unprecedented daily increment in the exchange rate and also tell us what are they doing to stabilize it,” he added.
Smith’s communication was read and forwarded to the committees on banking and currency, ways, means, finance and development planning to report in two weeks after investigation.
The dual currency regime in Liberia can be traced from the country’s historical ties with the United States of America and the proximity of the British West African colonies. Since its emergence as an independent country in 1847, the economy of Liberia has been either fully or partially dollarized.
Commerce Ministry Position:
Recently, the Minister of Commerce and Industry, Wilson Tarpeh told members of the House of Representatives that the scramble in the foreign exchange rate, particularly the United States Dollar is having a trigger down effect on the reduction in the price of rice, the country’s staple food.
The unprecedented rise in the buying rate of the United States dollar to the Liberian dollar varies at street vendors and forex bureaus in Monrovia and other parts of the country.
However, some financial experts say the Liberian dollar would likely keep dipping against the US dollar and may steadily rise.
The hike of the US dollar to the Liberian dollar is obviously causing hardship for marketers and consumers because of the arbitrary increase in goods and services as well as high punishing interest repayments to commercial banks.
The Central Bank of Liberia
It can be recalled the Central Bank of Liberia blamed the depreciation of the Liberian dollar to the US dollar mainly on account of declines in the prices of the country’s major commodity exports, rising import demand and deteriorating terms of trade.
Some pundits had blamed this on the departure of concession companies and widespread capital flights as contributing factors to the increase in the depreciation of the Liberian dollar.
As a consequence of the high exchange rate, Liberians who used to buy a 25kg bag of rice for LRD$1,600 are now buying the same bag of rice for LRD$2,100.
However, the CBL said the existing dual currency regime characterized by the high level of dollarization presents a major challenge to the CBL in conducting effective monetary policy