Monrovia – From the perspective of local forex traders in Liberia, the massive circulation of mutilated banknote is the cause of the depreciation of the Liberian dollar.
Currently, the US$1.00 is traded for LD$130.00.
The high rate, according to small business owners, is making trading very difficult.
Isaac Wonah is forex trader at on 20th Street in Sinkor on Tubman Boulevard; he said the exchange rate is going high because Liberians value the US Dollar more than the local currency.
“For this reason, everything we go to buy on the market we have to buy it in US dollars; and not everybody can afford the US dollars, so you will have to buy the goods at a higher rate with the local currency.
Therefore, the government has to step in so that the rate can reduce on the market to at least 50 to 70 [US$1 to US$50-70], then it will be better for us.
When the rate is high, Central Bank does not give it to us at a lower rate, so it is hard for us to make profit,” Wonah told FrontPageAfrica.
Wonah tried to dispel the belief that the Lebanese who also dominate the business sector are making the demand for the U.S Dollar high, and therefore, causing the local currency to depreciate.
“I will not blame the Lebanese people, but it is our own people acting wicked to us. Central Bank said she printed a lot new money, but we cannot see the new money on the market, only old bank notes flooding the market.
Right now, if you go to the Central Bank for one million dollars [Liberian dollars], they will give you the one million in so so old old money [mutilated notes], so where are the new banknotes?
Have they divided it amongst themselves? I think the government officials have shared the money amongst themselves; this is why we cannot see the amount of new money on the market, this is why we are suffering with the rate US rate.”
Interestingly, Wonah believes President-elect George Weah has the magic wand to stabilize the Liberian dollar.
According to him, the President-elect promised during his election campaign that upon his victory, he would ensure that prices of major commodities would drop in three months.
He, however, cautioned Weah by “to make sure he brings down all of Ellen’s corrupt government officials working in the present government if he wants to succeed”.
AJ Tarr, also a forex trader on 20th Street told FrontPageAfrica that forex traders often run into loses whenever the exchange rate suddenly goes up.
Tarr: “For example, if I sell the US at 130 [L$130 to US$1.00] and then after two days it goes up to 135, I will not be gaining but selling at a loss; so it is bad for the rate to keep going up. We are feeling the pinch, I won’t lie to you.”