The
foreign currency exchange rate restriction has just been lifted to allow market
forces such as demand and supply to determine the exchange rates of foreign
currencies to the Gambian dalasi.
This is a good and professional move by the government and the Central Bank of The Gambia.
However, this is not a licence or green light for forex dealers to hold the nation to ransom by maintaining unscrupulous dealings in the business of exchanging foreign currencies to the Gambian dalasi.
It is essential that real or true market forces are allowed to determine the exchange rate value of foreign currency to the dalasis, but it is also very essential to avoid applying unscrupulous means in the business, such as unnecessary speculation and hoarding of foreign currencies to influence demand and diminish the exchange rate value of the dalasi to foreign currencies.
This will cause serious problems for the economy such as inflation or price rise of goods and commodities in the country, as well as diminishing returns of financial savings in commercial banks.
When the local currency - in this case the dalasis - is made to decrease in value against major trading currency like the dollar, pound sterling, Euro and the CFA, the resultant effecton people’s savings and deposits in banks is disastrous.
The value of the savings will be drastically depreciated as it will continue to buy less and less of items it would have bought if the local tender’s exchange rate value is some what steady and strong.
A rapidly decreasing value of a local currency would cause serious problems for the banking system and generally the national economy.
This is why it is essential that dealers exercise restraint in trading currencies in the country.
The government said its earlier decision to intervene in the foreign currency market was meant to correct “certain distortions and market failures” that resulted in the continuous depreciation of the value of the dalasi against foreign currencies.
It will be good that partners involved in the forex rate dealings allow the true or real market forces to determine the exchange rate value of currencies.
Otherwise any artificial involvement, such as speculation, hoarding or exchange rate fixation, would hamper the financial system’s smooth business flow and transactions, as well as the revenue and income to state coffers. In short, the whole economy would be distorted.
So, dealers in foreign currencies and the state regulating authorities should actually be mindful of creating artificial situation in the forex market, so as to maintain a healthy financial system and economic order in the country.
“A hero is someone who understands the responsibility that comes with his freedom.”
Bob Dylan