Office of the President intervenes to regulate foreign exchange business

but does it have the mandate to do so?

President Yahya Jammeh

The Office of the President has issued a stern warning that very drastic action will be taken against any individual or business found culpable of foreign currency hoarding and speculating, as it launches operation no compromise on such practices with immediate effect.

The prompt intervention of the government is meant to reduce the selling rate of dollar by foreign exchange dealers from D34 a dollar (the current market price) to D28 a dollar, which is said to be the true value of a dollar to dalasi.  As a first step to curb “this nefarious activity” of foreign currency hoarding and speculating, the all powerful office has imposed a moratorium with immediate effect on all shipping of the US Dollar out of The Gambia with possible exemption for essential importation, which must obtain prior clearance from the Office.

A financial analyst, who wished not to be name, said the revised regulations for the licensing and operation of foreign exchange bureaus states that every bureau is free to quote its selling and buying rates.

Besides that, the analyst said, the legal power to regulate the financial industry and the foreign exchange business is that of the Central Bank of the Gambia and not the Office of the President.  To the analyst, Office of the President should have simply waited for the Central Bank to do its works rather than doing it for them.

The primary objectives of the Central Bank include promoting and maintaining the stability of the currency of The Gambia and as such it should formulate and implement monetary policy aimed at achieving this objective.

“Besides, foreign exchange business is like any other trade of buying and selling.  The Gambia being a free market economy the prices of things are determined by the interaction of demand and supply – the forces of the market.  So if demand is higher than supply the price tends to go up and that is what we have seen happening in the foreign exchange business,” the analyst said.  “Of recent, the demand of foreign currencies particularly the US dollar is up because this is the pilgrimage time and all the pilgrims need some dollars as pocket money.  This has partially caused the demand of the dollar to go up and probably the supply does not commensurate the demand causing the buying rate to increase.”

The analyst continued: “The increase in the prices of foreign currencies against the dalasi is not bad for everybody.  Those who have dollar and want to convert it to dalasi will enjoy as they will have higher price. Normally the buying and selling rate of most of the major international currencies is not more than one dalasi difference.  For instance, when a currency dealer buys a dollar for D33.50, normally he sells it for not more than D34.50.  So if you need a dollar you pay a higher price but equally when you have dollar and want to convert it to dalasi you enjoy higher price as well, so it’s on both sides.

“Despite that, I am not saying that the foreign exchange operators should be left to operate as they wish - escalating the prices of foreign currencies against the dalasi - as that will make the dalasi weaker and losses its value.  Therefore regulating their operations is a good thing but let it be done by the right authority - let everybody be seen to be playing its roles rather than one office trying to step in for everybody.

 

“Let the Central Bank that has the constitutional mandate to supervise and regulate the foreign exchange businesses to do its work – intervene when necessary to bring order and sanity in the business.” 

The analyst noted that businesses in the country continue to complain about high interest rates on loans from the banks in the country.  “Why don’t the Office of the President intervene and tell the banks to forcefully reduce the interest rates?” he asked rhetorically.  According to the analyst, reduction in interest rates will make loans accessible to small businesses so that they can grow and create more employment which will go a long way in addressing the heavy unemployment rate as well reduce poverty in the country.    

The analyst argued that if  the Office of the President has the mandate to intervene in a free market, why can it intervene to tell the commodity traders to reduce the prices of basic commodities which have been skyrocketing in the country beyond the reach of average Gambians - making many Gambians vulnerable to food crisis?. 

A news release from the Statehouse in Banjul last week has it that in order to curb foreign currency hoarding and speculating, the Office of the President has directed a team of enforcement agents to investigate, monitor all foreign exchange bureaus and unregistered agents, as well as any other institution, and are authorized to confiscate any US Dollar currency going out of the country without prior approval.

The Office of the President has given the enforcement agents the full authority to investigate, seize as well as prosecute those found to be hoarding any foreign currency especially the US Dollars.

“Anyone found violating these directives or not playing by the rules of honest trading practices will be prosecuted under the economic crimes law in addition to being banned from doing any business in The Gambia,” the President’s office said.

In the news release from the Statehouse, the Office of the President said it reserves the right to close any business, bureau de change, bank, or any company that is bent on sabotaging the economy of The Gambia without any further notice.