By Omar Bah
The Central Bank of The Gambia (CBG) has rescinded its decision to restrict foreign currency deposits and shipment of foreign exchange.
Recently the CBG Governor, Buah Saidy defended the controversial policy decision to stop commercial banks from paying in dollars and other foreign currencies.
Governor Saidy insisted that the policy was adopted because the CBG wanted to restrict the dollarization of the Gambian economy. However, the measure, announced in May, caused consternation to the business community and concern among the public. Many foreign current account holders complained it will affect them while others fear it would encourage hoarding of the dollar.
Dollarization occurs when a country begins to recognise the U.S dollar as a medium of exchange alongside its domestic currency. It normally occurs when domestic currency loses its usefulness as a medium of exchange for market transactions.
But in a statement issued yesterday, the CBG said: “The Central Bank of The Gambia announces the decision to rescind the recent restrictions on FCDs and shipment of foreign exchange. The objective of the directive was to regularize conduct of foreign currency transactions and to prevent unethical behaviour of some market participants.
“The Central Bank notified those customers can now deposit and withdraw from their FCD accounts in the approved currencies; the Dalasi remains the country’s legal tender and that transactions should be quoted accordingly; and that normal shipment of currency resumes with immediate effect subject to the usual clearance process,” the release said.
The CBG assured the public of its resolve to ensure smooth functioning of the foreign exchange market and safeguard the stability of the exchange rate of dalasi.
“Central Bank seizes this opportunity to advise all banks and licensed dealers in foreign exchange to strictly abide by foreign exchange regulations and guidelines,” the release added.
Reacting to the CBG statement, respected economist and analysist, Nyang Njie said: “On Sunday, I made a presentation of the current foreign exchange situation in the country and the adverse effects of the directive banning cash dollars from foreign currency denominated accounts. Well, am glad to report that the Governor and his team have come to the realisation that the directive was untenable and punitive to economic actors in The Gambia.
“The first step to normalcy is the lifting of the ban. The CBG must now come up with an effective foreign currency policy to mitigate against speculation and arbitrage. The issue of Money Transfer Operators (MTOs) needs closer scrutiny. This move will restore confidence and reduce the speculative tendency we’ve witnessed in recent months,” he wrote.