Tuesday, July 23, 2019

A GOVERNMENT WITHOUT A FOREIGN EXCHANGE POLICY WHICH IS WHICH, FIXED EXCHANGE RATE OR FLEXIBLE EXCHANGE RATE POLICY?

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Hence, the official interbank rate for the dollar was D51.07. The Office of the President gave an executive  directive  on 4th May that the exchange rate of the dollar should be reduced to D50 for the dollar. Could you imagine the losses to be incurred by those who have already spent dalasis to purchase dollars for sale at the new rate? Suffice it to say that the Central Bank rate is not that of the speculators. It reflects the state of the currency market. Lack of foreign exchange rate stability would lead to hoarding of foreign exchange whenever there is executive directive to reduce the rate. This may lead to the scarcity of foreign exchange and reduction in capacity to pay for imports. This is a recipe for economic down turn. The real way to protect the value of the dalasi is to increase exports of goods and services.]]>

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