Monrovia – There is confusion on the currency market in Liberia; at the moment it is unknown what exchange rate is being used to exchange U.S. dollar for Liberian dollar. The Central Bank of Liberia (CBL), commercial banks and operators of forex bureaus all use self-determined rates.
Report by Bettie K. Johnson-Mbayo, [email protected]
FrontPage Africa visited several money exchangers but they could not say the exact rate they are exchanging for. Some were exchanging L$130 for US$1.00, others are exchanging at 1:100, 1:150. The exchange rate also varies in the various commercial banks.
Liberia is a dual currency country; both the U.S. and Liberian dollars are legal tender.
Operators of forex bureaus put the blame on the Central Bank of Liberia.
They accused the Central Bank of failing to announce a new exchange rate since holding a consultative meeting with them on Wednesday.
The Central Bank, however, published on its website L$152 to US$1.00.
Abdullai Sheriff, a street money exchanger on Johnson Street said he changed his rate after he was told by some friends that they were changing at L$150 for US$1.
He said the rate during the early morning hours of Thursday, July 19, varied, as he saw some of the rates at 100/130/140 while he was changing at 140 until he later started changing at 150 later in the afternoon.
He alleged that some money exchangers, especially the Fulanis, were refusing to exchange their money.
Kelvin Semah, money exchanger on Ashmun Street was changing for L$100 to US$1 with the excuse that he did not have sufficient Liberian dollars to change at a higher rate.
“Look in my bag, I have over US$300. I’ve been calling him [the Fula man he exchanges his money with], he has not answered, so what I have I need to manage it.”
Semah has been exchanging money for the past 10 years after he graduated from the University of Liberia with a bachelor degree in Accounting.
Daniel Dean, a money exchanger on Broad Street, told Frontpage Africa that the refusal of CBL to disclose the rate on Thursday contributed to the self-determined rate amongst operators of forex bureaus.
“Since we had the meeting on Wednesday, they should have announced the rate today, so that we can abide by it, but since they didn’t everybody changing at their own rates.”
His rate was L$100, despite Ecobank on Ashmun Street and CBL rate is L$160.
Ezekiel Fahn on 11th Street in Sinkor had his booth closed because he was afraid to disclose his rate.
He exchanged at L$162 early in the morning but dropped it at noon to L$120 because his regular money vendor had refused to bring him more Liberian dollars.
He alleged that the refusal of the Fula nationals to exchange money could be as a result of the regulations announced by CBL at the meeting on Wednesday.
Fahn said CBL ordered that beginning Friday, July 20 and every other Fridays till otherwise, all forex bureaus would be required to declare their operational fund in both U.S. and Liberian dollars.” I think the Fulas’ don’t want to be regulated because they don’t put their money in commercial banks.”
The newly appointed Executive Governor of CBL Nathaniel Patray [yet to be confirmed by the Senate] warned operators of forex bureaus and street money exchangers not to publish exchange rate on boards or placards in the streets.
“All rates should be displayed inside the bureau; we know that if you went to a forex bureau you will see that each individual has his own rate. The rate that is published in a bureau should be used by all money changers within the bureau,” he said, warning that the Central Bank would prosecute violators.
Patray at a consultative meeting with vendors on Wednesday called on the vendors to legalize their status with the Central Bank of Liberia or risk closure.
The Liberia National Police, Liberia Immigration Service, Monrovia City Corporation will begin the enforcement of the bureau exchange regulations, he said.
“The enforcement will entail the closure of unlicensed forex bureau from the street, removal of all illegal forex exchange operators from the streets, confiscation of monies belonging to illegal operators,” he said.
Patray revealed that Liberian dollar banknotes outside the banking system amount to about L$15,242,000,000. He has also announced the introduction of licensing requirements for all foreign exchange bureau.
Mr. Patray said as part of Government’s economic stimulus initiative, all Foreign Exchange Bureaus in the country would have to obtain a license before operating.
“The objective of the action plan or framework of this meeting is aimed at implementing every necessary and complementary policy that will help reduce the amount of currency outside the banking system and by extension to ensure broad exchange rate stability over a period of time,” he said.
According to him, the increasing pressure on the Liberian dollar can be attributed to several direct and indirect factors, including but not limited to weak performance of the Liberian dollar and the extended sector of the economy, constraining the foreign exchange and supply to the economy.
Mr. Patray said the Liberian dollar came under significant pressure at the beginning of 2017 and the situation has further deteriorated in recent time.
He added, “The CBL continues to intervene in the foreign exchange market through the regular conduct of foreign exchange auctions, based on available foreign exchange,” noting that, the main source of foreign exchange for the CBL now is the remittance proceeds.”
He said statistics show that at the end of June, this year total foreign exchange intervention by the CBL was US$26.9 million reflecting a net inflow of US$10.7 million excluding CBL operations and other expenditures; while the remittance split may not be directly contributing to the reserve build up, it is significantly helping to reduce the pressure on the reserve.