By Mabinty M. Kamara
Some business people have expressed optimism over the fall in the exchange rate between the US dollar and the Leone, Sierra Leone’s legal tender.
For the first time in many months, the exchange rate of the Dollar to the Leone has dropped to below Le1million. As of Friday, December 6, a 100 US Dollar was buying at Le990, 000 and selling at Le1million, in the Black Market.
The fall, although minimal, has been steady for over a week now. Black market currency peddlers and businesspeople say they don’t quite understand the cause of the fall but they would be happy if it stays that way.
Isaac Bangura, a dollar hawker, said: “even though this is what we do for our living, we do not hope for the exchange rate to keep inflating on a daily basis, because it affects everything and everybody including us,” he said.
He added: “Whenever the exchange rate increases, we all experience increase in prices of every other commodity, including pepper, which is locally produced, with the excuse that the Dollar exchange Rate is high,” Bangura said.
Tamba Charles, another hawker, explained that they started experiencing the fall in the exchange rate since last weekend. But he had no idea what’s responsible for the situation.
“We don’t know what has led to the fall of the exchange rate. It started falling since Saturday and it’s been going down gradually in almost every two days. But we only hope and pray that it continues to fall because sometimes the price of the dollar falls and by the time one can make up something about it, it goes up again. We pray that whatever is being done to reduce the exchange rate continues to be done,” he said.
Sierra Leone’s economy is heavily reliant on foreign currencies like the US Dollar. Government has struggled for a while to control the depreciation of the Leone.
A huge chunk of the country’s import is done in US Dollars. This has put enormous pressure on getting the foreign currency, so that in the past it has contributed significantly to its shortage and consequent hike of the exchange rate in a poorly regulated money market.
The depreciation of the Leone has a ripple effect on goods and services. For example, the Sierra Leone Government says it spends more than US$200million just to import rice, the country’s staple food. Private businesses importing rice or any other commodity also have high taxes to contend with.
“Almost all the rice we eat is imported and the Dollar is what we use to buy from our suppliers. So, if the exchange rate is high and you must pay taxes and other things, then prices will definitely go up in the end,” said rice dealer Amadu Bah.
The seeming stability however hasn’t affected the prices of commodities in the market. The price of major commodities like rice and fuel still remain the same.
Mr Bah and other business people hopes this change soon.
Mbalu Kamara, an international businesswoman who deals in fabrics, explained how the fluctuation in the value of the Leone and the Dollar affected her business. She said things got so bad that some of her colleagues had to wrap up their businesses in fear of running into losses.
“If you exchange dollar here for over one Million Leones, when you go to Guinea, if you then exchange the same dollar with the Guinean Franc, the value of the money reduces drastically. That is why prices go up in the market, because nobody does business to lose. But in the past, it used to be the reverse, when you exchange dollar here and go to Guinea, you make extra profit on the exchange because the Leone was more valuable than the Franc Guinea,” she said.
Like so many other businesspeople, Ms Kamara hopes the Leone only gets stronger against the dollar or at the very least remains stable.
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