Why The Exchange Rate Is Very High
BY Togba-Nah Tipoteh
Professor of Economics; Former Minister of Planning and Economic Affairs
Money is something that people all over the world, including Liberia, want very day to buy something. Whenever people want plenty of something but that something, like food, is not plenty, then the price of that’ something goes up. Whenever there is much more demand for the food but not much of the food is available, then the price of the food goes even higher. So is the case with money. Each country, like Liberia, has a national currency or national currencies.
In Liberia, there are two recognized national currencies: the Liberian dollar and the United States dollar. When there is much demand for the for the United States dollar and there is not much demand for the
Liberian dollar, then more Liberian dollars are used to get the United States and this is how the rate of exchange has moved recently from the 80sLD to the 90sLD to one United States dollar.
People in Liberia like imports very much to the point where by March of this year, they were importing USD70million more worth of goods than the worth of goods that Liberia was exporting. Then we have influential former Liberians, in and out of the government, now United States citizens, who influence the government to have more interest in the United States dollar because they need to send United States dollars to the United States to cover family housing bills and other personal bills.
At the bottom of everything is the lack of the commitment of this government, like past Liberian governments, to improving the value of the Liberian dollar by adding value to the production of our
abundant natural resources like iron ore, rubber and timber.
A 16 year old Liberian child told Veteran Liberian Journalist Dr. Kenneth Best and me nearly two years ago, that Liberia has iron ore so why does not Liberia produce steel products. Liberia has rubber and timber so why does not Liberia produce rubber and timber products.
The present government spends millions of United States dollars importing furniture and intentionally giving up the opportunity of using Liberia’s world class timber to produce furniture that would be used in Liberia and exported to many countries to improve the value of the Liberian dollar and therefore reduce the quantity of Liberian dollars used to get the United States dollar.
As Liberia, led by a government uncommitted to value addition, continues to value what other countries produce much more than what Liberia produces, Liberia will continue to suffer the consequences of the very high exchange rate.