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Haiti - FLASH : How far will the Gourde fall ?
01/10/2018 08:24:54

Haiti - FLASH : How far will the Gourde fall ?
Since June 2017 our national currency continues to depreciate and it takes more and more gourdes to buy 1 US dollar.

Recall that the exchange rate of the Gourde which reached 69.35 gourdes for a US dollar in March 2017 had dropped rapidly to 62.2 gourdes in May 2017 due to the sale of dollars and other decisions by the Bank of the Republic of Haiti (BRH), could not be maintained at this level more than 2 months.

In June 2017, the exchange rate had begun to rise again despite BRH's decision to sell more dollars in the market [$ 100 million by December 2018 https://www.haitilibre.com/en/news-24576-haiti-notice-brh-$100m-for-the-foreign-exchange-market.html

The exchange rate continued to rise to 70.79 gourdes (average BRH source acquisition rate) on 21 September 2018 for one US dollar.

For the record, today it takes almost 10 times more gourdes to buy 1 US dollar, whereas in 1991 it only needed 7.86 gourdes to buy 1 US dollars (source BRH).

Download the evolution of the Gourdes since 1991 : https://www.haitilibre.com/docs/tauxdechange_chrono.pdf

Between May 2017 (62.20) when the exchange rate had stopped falling, and on 21 September 2018 (70.79) the exchange rate increased +8.59 gourdes for 1 dollar (+ 13.8%), an increase that contributes to the high cost of living and affects the purchasing power of families with Gourdes incomes in a partially dollarized economy.

Given the weakness of domestic production, exports, subsidies for fuel and HRE and insufficient tax revenues that contribute to the increase in the deficit [which is approaching 20 billion https://www.haitilibre.com/en/news-25607-haiti-news-zapping.html ], it is unlikely that this trend will reverse in the short term, EXCEPT if the BRH (depending on its reserves and room for maneuver) is able to take significant sustained actions over time, to counter the rapid growth of the Gourdes/Dollars exchange rate and subsequently the devaluation of our national currency.

If nothing concrete is done to combat this trend, the exchange rate Gourdes could rub the 75 Gourdes for a dollar at the end of the year (usually bullish period of the holiday season).

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