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How Is the Foreign Exchange Market Coping After the Militarisation of the Supervisory Role of the State? Foroyaa Is Investigating

February 7, 2014

Ousman Njie

In the last financial year foreign exchange bureaus went through their most traumatic years as many of their employees were arrested and detained . Foroyaa emphasised that such measures could encourage capital flight or capital retention by Diaspora Gambians and this undermines the foreign exchange market which stabilises the value of the dalasi because of robust trading in the buying and selling of foreign currency.

This is why Foroyaa was keen in reviewing the budget speech to find out whether the volume of foreign exchange traded last year increased or decreased in order to make an analysis. In the 2013 budget the Minister did report developments in the foreign exchange market. He indicated the following: "Reflecting the slowdown in global economic activity, the volume of transactions in the foreign exchange market, measured by aggregate sales and purchases of foreign currency, decreased to US$ l .48 billion in the year to end-September 2012 from US$1 .60 billion a year ago.

Total sales (indicating demand) amounted to US$774.8 million in the year to end-September 2012 relative to US$787.6 million a year ago. Similarly, total purchases (indicating supply) decreased to US$764.4 million from US$768.6 million during the review period.

The US dollar remains the most traded currency in the domestic foreign exchange market". In 2014 the Minister of Finance indicates the following: "Activity volumes in the domestic FX market for the nine months of 2013 contracted relative to the same period in 2012.

During the period under the domestic FX market recorded an excess inflow of US $12.69 million as against US$17.44 million in 2012." It is therefore clear the volume of sales and purchases of foreign exchange has not been fully revealed to enable us to know the real impact of the ilitarization of the foreign exchange market on the trade in foreign exchange.

What is evident is that it did not stop the value of the dalasi from depreciating. The science of Economics does not respond to the military directives.

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Source: AllAfrica

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