The foreign exchange market has negatively responded to the appointment of Nathaniel Patray as Executive Governor of the Central Bank of Liberia with the local currency rapidly trading downward at 6.6% in seven days.
When President George Weah nominated Patray on July 4, following Governor Milton Weeks’ resignation the exchange rate between the Liberian dollar and the United States dollar was L$152/US$1.
But seven days after his nomination, the depreciation of the Liberian dollar has shown no sign of deceleration as it is being traded at L$162/1USD on the market while the Central Bank is recording it at L$158/U$1.
The rate was LS$100/U$1 when former Governor Weeks was appointed and left it at LS$152. His inability to control inflation and stabilize the currency market was chief reason for his resignation, which tastes of a forced exit.
CBL governors are statutorily required to maintain price stability and to ensure a sound banking and financial system, with key objectives such as maintaining the value of the domestic currency and external reserves and pursuing appropriate interest and exchange rate policies.
Although the CBL forecasts Liberia’s real GDP growth this year will move up to 3.2 percent, or 0.7 percentage point above the 2.5 percent growth recorded in 2017, Patray is taking over an economy that is plagued with surging inflation and declining currency. Inflation at the end of March 2018 stood at 17.6%, while average depreciation is estimated at 25%.
The poor state of the local currency has caused a general raise in price levels with those of essential commodities such as gasoline and food items being conspicuous.
Consumers and entrepreneurs are currently feeling the pinch of the unhealthy market situation. Some traders have complained they are operating at a complete loss because their goods are traded in local currency while more of it is required to buy the United States dollar for import purposes.
Mr. Patray has 30 years experience as a central banker. He served as deputy governor of the erstwhile National Bank of Liberia and member of the CBL Board of Governors.
– Festus Poquie