On November 27, 2024, the Central Bank of Liberia (CBL) addressed recent public concerns regarding the alleged shortage of the Liberian dollar and prevailing distrust in the local currency. In a formal press release issued on November 26, the CBL firmly stated that there is no shortage of the Liberian dollar within the country, countering claims that the currency’s issues go beyond basic supply and demand dynamics. It emphasized that the exchange rate is determined by market forces and that the foreign currency exchanged for Liberian dollars plays a vital role in bolstering the domestic currency’s value. This affirmation serves as a confirmation of the market-driven nature of the exchange rate, distancing the central bank from any notions of a strategic failure in managing the currency.
Since late 2019, the CBL has transitioned from an exchange rate-targeting approach to an interest rate-based monetary policy that focuses on managing Liberian dollar liquidity effectively. This policy shift has been aimed at safeguarding the nation’s foreign reserves and controlling inflation. The CBL reports success in this new direction, highlighting that it has strengthened the Liberian dollar’s value, alleviated pressure on foreign reserves, and kept inflation within single-digit levels. These achievements align with the CBL’s principal mandate to maintain economic stability, thus enhancing public confidence in the domestic currency contrary to recent negative perceptions.
The recent Monetary Policy Committee (MPC) meetings yielded a significant policy decision when the monetary policy rate was reduced from 20% to 17%. This adjustment not only reflects an effort to stabilize the Liberian dollar but also appears to foster increased public confidence in the currency. Despite some reports suggesting dire circumstances for the Liberian dollar, the CBL portrays a more optimistic view, indicating that the adjustment in interest rates supports ongoing stability and an upturn in trust in the national currency.
Furthermore, the CBL clarified misconceptions related to its foreign exchange practices under the IMF’s Extended Credit Facility (ECF) program. It categorically denied the claims that it conducted foreign exchange auctions amounting to LRD 65 million in 2023. According to the CBL, there has been no auction activity since the latter half of 2019, illustrating that all claims made about ongoing auction processes are unfounded. As of October 2024, the CBL’s report indicates that there is an estimated amount of LRD 28 billion in circulation, and it assures the public that it has more than adequate reserves to navigate market demands, particularly during festive periods.
In light of the misinformation circulating in the media, the management of the CBL has sought to dissociate itself from erroneous publications that imply a crisis regarding exchange rates and the scarcity of Liberian dollars. The bank issued a strong warning to the public, emphasizing that statements related to monetary policy must originate from the Central Bank to accurately represent the institution’s official position. This stern caution aims to mitigate misunderstandings and maintain harmonious communication regarding Liberia’s economic status.
The CBL reassured the public of its commitment to effective monetary policy management, which is vital for preserving economic stability, protecting the value of the Liberian dollar, and strengthening the overall financial system in Liberia. By directly addressing the circulating doubts and reinforcing its policy framework, the CBL aims to foster confidence in both the local currency and the financial system, underscoring its role as a stabilizing force in the face of economic challenges.
