Monrovia, Liberia—The Central Bank of Liberia (CBL) clarifies recent reports alleging a shortage of Liberian dollars and distrust in the local currency. The CBL categorically indicates that the exchange rate is strictly market-determined and that there is no shortage of Liberian dollars in the economy.
Contrary to claims that Liberia’s currency issues stem from more than supply and demand dynamics, the report acknowledges that foreign currency exchanged for Liberian dollars support the value of the domestic currency. The CBL considers this as a clear validation of the market-driven nature of exchange rate.
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 egarding 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.