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City of Banjul
Sunday, September 20, 2020

Hamat says fixing currency rates harmful

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Mr Bah stated this in a statement made available to journalists on Thursday. 

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He said: “You cannot impose the rates of a foreign currency against your national currency when you do not even have the reserve to back it up. If you are to impose the rate of a particular foreign currency against your own currency, you must make sure that when people go to the banks to buy those currencies, they are available and can be bought at the rate you set.

“This will just make the issues worse because when you approach the banks and ask for US dollar, British pound or euro, they will tell you, ‘we don’t have it’. People, just as banks, won’t want to exchange it at a rate lower than the price with which they bought it for. The Gambia, that will need the dollar for its trade, will go and buy it elsewhere at their rate because you need it. 

“In fact, they are doing more harm to the economy because investors will get scared, it will hinder the flow of foreign direct investment into the country, people will not bring their money into the country because the government’s interference in the currency market, which should be determined by the market forces will be seen as against the principles of the free market economy which we said we are.

“The government needs to investigate and find out why the dalasi is depreciating considerably against major currencies and the Economic Intelligence Unit at the Central Bank can do that. As a government they must be able to understand the market behaviours and why certain things are happening. One of the reasons for the depreciation of the dalasi from our own analysis is that people where buying foreign monies, CFA and US dollar, and go to Guinea Bissau to engage in cashew trade which is currently at its peak. So, there was huge demand for these foreign monies in the currency market. 

“Most importantly, we also are suffering from the hard bite of the consumerist appetite we have cultivated over the years- we are only importing with less, if any, to export and that is putting too much pressure on the dalasi. The Government must do something to create entrepreneurs, invest more in the agricultural sector, and support the fishing industry to support the country’s export capacity in order to support the dalasi.”

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