To explain why LRD/USD exchange rate is skyrocketing
Since a meeting was held between the Central Bank of Liberia (CBL) and the two finance and banking committees at the Legislature just over a week ago to find solutions to curtail the extreme rise in the exchange rate between the Liberian Dollar and its United States counterpart, something is yet to be done to prove the significance of the meeting and the agreement reached between CBL and the Legislature’s two finance committees.
The failure of that meeting to impact the public financial sector, amidst the seemingly uncontrollable inflation, has prompted Montserrado County Electoral District #2 Representative, Jimmie W. Smith, to write the House’s plenary demanding answers from the CBL and the Ministry of Finance and Development Planning (MFDP) on why the exchange rate is rising extremely high each day.
In a letter recently submitted to the House, Smith said it is appalling that the nation should continue to suffer irreversible consequences as a result of a situation he thinks can be curtailed.
“It is my pleasing duty to request your approval through this communication, to summon the managements of the CBL and the MFDP to give reasons why the USD continues to spontaneously rise in exchange on a daily basis against the LRD. We agree that it is not possible for both currencies to be equal in an exchange rate but the manner in which the exchange rate between the two continues to rise is greatly disturbing,” he noted in his letter.
According to Smith, the ratio between the USD and the LRD has a serious negative trickle-down effect on the majority of the country’s population who still find it difficult to acquire their basic needs.
“As the exchange rate increases, so the prices of things continue to rise on the market. This, I think, is unfair to our people who have reposed their trust and confidence in us not only to make good laws but also check on the impact of the operations of the Executive and Judicial branches of our government,” he said.
He said there is a growing need for people schooled in business and finance and are managing the country’s financial institutions to do something about the situation.
“Let them come up with suggestions that will help alleviate the situation. Let them recommend to the government what is worth doing in order to ensure there is a control mechanism,” he said.
Why the exchange rate at the time of CBL and the Committees’ meeting was at L$147, the exchange rate now stands at L$153 to US$1 across the country.
CBL and the Committees, among other things, discussed the continuing depreciation of the LRD and its impact on the purchasing power of citizens and efforts by the CBL to intervene in the foreign exchange market to help smooth the volatility.
Concerning mutilated banknotes and the Sirleaf Administration’s printing of new banknotes, Smith said he is taken aback by the wave of inconsistencies between the two.
“I still wonder why millions of USD was used to print millions of new Liberian banknotes. I say so to mean that we still have the printed banknotes dated as far back as former President Charles Taylor’s time on the market, while the new Sirleaf’s banknotes are also on the market. Can’t we have uniformity in our currency?” he asked.
He noted that while there may be a challenge to equal the exchange rate between the LRD against the USD, it is the prerogative of the government to institute measures that seek the interest of the people.
“I strongly disagree that we as a government lack the will power to monitor and regulate our business community and other cycles of our collective life. I am in total disagreement that what is happening now cannot be put under control,” he said in a telephone conversation.
Smith said he looks forward to seeing Milton A. Weeks, Executive Governor of CBL, and Samuel Tweah, Minister of Finance and Development Planning, before plenary soon, to give reasons why the financial market continues to be what it is now and what ideas are worth proffering to improve the situation.
He expressed hope that his colleagues serving on the committees on banking and finance at the House of Representatives and the House of Senate see reason to analyze issues surrounding the ongoing extreme rise in the exchange rate and suggest to plenary what needs to be done to make CBL plays its role as the country’s custodian of finance.