The Liberian dollar, the nation’s legal tender, used to transact business, continues to depreciate in value; resulting in rapidly increasing prices of basic commodities.
In the commercial district of Red-Light in Paynesville, the exchange rate stands at LD$90.00 to one United States Dollar in some places while others offered LD$85 for US$1.
In central Monrovia the rate generally stands at LD$85 to 1 US Dollar with 87 as the rate accepted in other places in the city.
Fluctuation in the rate of the Liberian dollars to the US directly affects the prices of basic commodities.
Some locally produced commodities— including food items— are now being sold in US Dollar as is the case with manufactured goods and imported rice. Sellers usually attribute the high price to the skyrocketing rate of the US Dollar to the Liberian Dollar.
Marketers justify their claims by explaining that after they sell locally produced commodities, they in turn change to US Dollars to purchase other items, and for that they have to sell their products in conformity with the existing exchange rate so they won’t suffer business losses.
A pile of plantain containing three pieces in the Gobachop Market in Red-Light— for instance— is now sold for $75LD while the entire head is sold between 700LD and 800 dependent on the place you buy it from. This same quantity of plantain, a few weeks ago, used to sold for at least LS50, thus the difference of L$25.
In this market traders bring goods from the interior and turn them over to retailers in Monrovia to sell and give their principal amount while they (retailers) get the profit earned; an activity given the local moniker “Gobachop.”
Rice and petroleum products are two basic commodities whose prices directly relate to the US and Liberian Dollar exchange rate.
These products are imported and require using the US Dollar to buy them. They also pay customs duties at the port in US Dollars to clear out the goods.
Local dealers must sell in Liberian Dollars locally, so they compare the price of the product with the existing rate of the US Dollar to determine the prices of these products.
On the basis of this calculation, the price of gasoline has risen up to L$345.00 at TOTAL service stations, while other stations and individual dealers sell it for L$350.00 and $355.00. Fuel is sold for L$360 at TOTAL stations in central Monrovia while other stations and some individual dealers sell for $370.00
A resident of Zwedru, Grand Gedeh County in the south-east told this paper that gasoline is sold for L$400.00 in that county while fuel is $475.
The high rate of the US Dollar to the Liberian Dollar is a concern for ordinary Liberians. Public sentiments indicate that it is caused by capital flight that involves remitting more US Dollars in accounts of people in the United States by government officials and some private individuals.
Although not verified, such activity allows more US Dollars to go out of the country thus making its demand high on the market.
The public also believes that more investors have come into the country and are operating in the extractive sector, as such, it is expected that more foreign exchange would flow here to give value to the Liberian Dollar.
In 2012 the Central Bank of Liberia instituted regulations to have all foreign exchange bureau operators/money changers registered to control the financial market which may help to control the fluctuating rate, but it (regulation) has not been effective and money changers have gone back to the streets with their businesses.
In September of 2013 Central Bank Governor, Dr. J. Mills Jones, told Liberia’s Council of Chiefs and Elders at his honoring program that until Liberians can produce finished goods out of the resources they have, it will be difficult to control the US rate.
Amidst this advice, other local business entrepreneurs suggested and published in this paper that government decides on which of the two currencies to use in the country for transacting businesses instead using both simultaneously.
According to them, the idea of using a single currency would ease the fluctuating rate since all transactions— including payment of taxes— would be done in it.