The Liberian dollar has gained strength against the US dollar after the Central Bank of Liberia implemented a lower interest rate policy. The exchange rate has improved significantly, with the LRD appreciating from 192 LRD per USD on October 29 to 180 LRD per USD by November 27.
This 6.25% gain highlights a broader trend over the past 30 days, during which the LRD experienced a high of 0.0055 and a low of 0.0052 against the USD, culminating in a 30-day average of 0.0053.
This reflects a positive change of 6.49% over the period. Even more encouraging, the LRD’s performance over the last 90 days aligns with this upward trajectory, seeing a high of 0.0055 and a low of 0.0051, with an average of 0.0052, marking an increase of 8.14%.
The CBL has taken proactive measures to bolster the economy, shifting from an exchange rate targeting system to an interest rate-based monetary policy since late 2019, the Bank said late Tuesday night. The recent cut in the monetary policy rate from 20% to 17% is viewed as pivotal in stabilizing the LRD and boosting public confidence in the domestic currency.
The bank has reassured the public that claims of a shortage of Liberian dollars and a lack of trust in the currency are unfounded. The CBL emphasized that the exchange rate remains market-determined and that sufficient LRD is in circulation, estimated at approximately LRD 28 billion, supported by robust reserve management.
CBL’s Proactive Monetary Policy
Since the last quarter of 2019, the CBL shifted from exchange rate targeting to interest rate-based monetary policy framework for effective Liberian dollar liquidity management, safeguarding foreign reserves and containing inflationary pressure. This approach has:
- strengthened the value of the Liberian dollar.
- eased pressure on the country’s foreign reserves.
- Contained inflation within single digit in line with the CBL’s core mandate.
At the recent Monetary Policy Committee (MPC) meetings, the monetary policy rate was reduced from 20% to 17%, a move that has supported relative stability in the Liberian dollar and increased public confidence, which reflects growing trust in the domestic currency, contrary to the report.
Additionally, under the IMF’s Extended Credit Facility (ECF) program, the CBL discontinued foreign exchange auctions with strict restriction. The assertion in the report suggesting that auctions conducted in the tune of LRD 65 million in 2023 is incorrect, as no auction has been conducted by the CBL since the last half of 2019
Liberian Dollar currency in circulation
As at October 2024, the Liberian dollar currency in circulation is estimated at approximately LRD 28 billion. In addition to the Liberian dollar in the operational vault, the CBL maintains more than adequate LRD in the reserves vault of the bank to meet current and post festive market demand and ensure seamless transactions.
The Management of the CBL dissociates itself from recent publication in the local daily regarding the exchange rate and LRD scarcity. The Bank strongly cautions the public that statements on monetary policy must be authorized by the Central Bank of Liberia to reflect the Bank’s official stance.
The public is reassured of the CBL’s effective monetary policy management to preserve economic stability, protect the value of the Liberian dollar, and strengthen the country’s financial system.
