Central Bank of Liberia says exchange rate fluctuations are temporary and highlights 17 percent CBL Bills

The Central Bank of Liberia said the current depreciation of the Liberian dollar and related exchange rate fluctuations are temporary and mainly reflect post-festive seasonal demand for US dollars as businesses restock goods sold during the December festive period. It framed the move as consistent with historical foreign exchange market patterns and said it does not indicate a structural weakness in foreign exchange market management. To support that assessment, the bank said Liberian dollar currency in circulation was less than 4 percent of nominal gross domestic product, less than 15 percent of the money supply and about 10 percent of annual import payments as of the end of November 2024. It also said net US dollar remittance inflows into the domestic economy were estimated at USD 661.8 million at the end of November 2024, almost four times the volume of Liberian dollar currency in circulation. On that basis, it said the stock of Liberian dollars is too low to create a lasting risk of exchange rate instability and urged holders of large Liberian dollar balances not to panic, pointing instead to CBL Bills offering a 17 percent effective annual interest rate. The bank said it will continue to monitor foreign exchange market conditions and is prepared to implement further monetary policy measures in coordination with fiscal authorities and other stakeholders. It also urged the public to avoid speculative behavior in the foreign exchange market.