Liberia’s Central Bank Denies Artificial Exchange Rate Drop While Pushing to Curb Inflation Nearing 16%
- Michael T
- Sep 10
- 2 min read
MONROVIA, Sept. 10, 2025 — Liberia’s Central Bank is denying accusations that it engineered an artificial drop in the U.S. dollar exchange rate, even as evidence points to deliberate currency rationing intended to curb inflation now nearing 16 percent.
The bank attributed the rapid fall of the exchange rate—from 200 to 184 and down to 170 on the parallel market—to a strengthening Liberian dollar. But scrutiny from market data, trading trends, and the bank’s own acknowledgments of “currency sterilization” indicate otherwise. Analysts say the real driver is intentional liquidity tightening, designed to restrict Liberian dollar supply under the guise of defending the currency.
Policy shifts throughout 2025 reveal a broader pattern. The Central Bank raised its Monetary Policy Rate to 17.25 percent and reinforced commercial bank reserve requirements—25 percent on the Liberian dollar and 10 percent on U.S. dollars. Through CBL Bills and other measures, excess liquidity was steadily absorbed from the system. Currency in circulation rose by just 2.6 percent, even as inflation climbed and the economy expanded—statistical evidence of deliberate rationing.
The human cost of these policies is mounting. Public workers, including teachers, nurses, and police officers, typically receive 30 percent of their salaries in Liberian dollars. With a weakened currency, workers are buying less, and inflation is driving up daily expenses, causing their real incomes to continue eroding. From food to housing, families are struggling to keep pace with rising costs.
While the Central Bank publicly dismisses accusations of dollar hoarding and insists the exchange rate reflects market forces, its tightening measures suggest otherwise. The contradiction between official messaging and economic reality is deepening distrust in the bank.
Economists warn that unless policymakers act with transparency and shift toward measures such as inflation-indexed wages, the credibility gap will continue to widen. For now, many Liberians continue to feel the pain of policies aimed at stabilizing the economy but squeezing household finances.
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