Few hours to President George Weah’s State of the Nation Address on Monday, Jan. 29, there appeared to be an sudden, significant drop in the LRD/USD exchange rate. However the drop did not affect prices of basic commodities, including gasoline and transportation. Until Monday, the exchange rate was L$135 to US$1.
But the sudden drop in the rate, according to a Daily Observer survey, was due to the speculation that President would have swiftly intervened to announce measures that will have stabilized the exchange rate.
Currently, the LRD to USD exchange rate spans between L$90 and L$110 to US$1, which is, for once, far below the Central Bank of Liberia’s (CBL) published market ‘buying and selling rates.’
About two weeks ago, the CBL authorities intervened in the exchange rates, but it cannot be determined if the intervention influenced drop of the Liberian dollar to the US dollar.
CBL Communication Director, Cyrus W. Badio told the Daily Observer via mobile phone yesterday that recently, the bank infused a huge amount of money into the economy to stabilize the rate. He did not, however, state how much was infused into the economy.
According to some business people, the drastic reduction in the exchange rate is good under President Weah, but the prices of goods and commodities are still high on the market.
Ma. Bendu, who sells in the Red-light market said the rate is low but the prices are still the same, because commercial drivers still buy gasoline for L$465, and charge L$100 from ELWA Junction to Broad Street.
Abraham Smith, shoe retailer said “Business is not easy… Three months ago, things were fine but this time no way because of the high exchange rate. Now if you buy your goods at the rate of L$130 or L$131 to U$1 it makes it difficult to buy our goods.”
“When we try to complain, they (customers) usually tell us that the U.S rate is too high. My recommendation to the new government is to drop the prices of commodities on the market and reduce the U.S. rate.
“Another thing the new government must do is to create more jobs for the young people to help reduce poverty in the country because things are very expensive and the common people cannot afford to provide for themselves,” Smith added.
Amos Zoker, Used Tires Retailer said, “We were buying the wheelbarrow tires for LD$450 but the price has increased to LD$650 because of the U.S rate. So, the U.S rate is really embarrassing us. I want the new government under the leadership of George Weah to try hard and reduce the prices of goods, regulate the exchange rate and improve the economy.”
A representative of business rights advocacy group, Patriotic Entrepreneurs of Liberia (PATEL), also told the Daily Observer that “the entire business community is right now confused because we don’t know where this news came from on the massive reduction in the foreign currency.”
According to him, President Weah promised during the elections that if elected, he will ensure that the prices of major commodities would drop in three months.
Based on this, “we thought his state of the nation address would immediately reduce the exchange rate.”
He said the country is now in a serious economic crisis and therefore, President Weah should hurry up and take Liberians out of the economic doldrums and the private sector should be given a greater chance in the country’s economic development drive.
He highlighted the importance of Liberia’s restoration of its key economic role in the region, especially through increasing exports and encouraging investments.