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Increase exports to boost the local currency

Editor,Refer to story “Declining franc no cause for alarm, says central bank”.
VALUE WOES: The Rwanda Franc has lost close to 4 per cent value against the US dollar since the beginning of the year. The New Times / File
VALUE WOES: The Rwanda Franc has lost close to 4 per cent value against the US dollar since the beginning of the year. The New Times / File

Editor,

Refer to story “Declining franc no cause for alarm, says central bank”. So the central bank thinks there is no cause for alarm as the franc tumbles? Seriously? Should we thank them as our wallets are getting drained?

Essie, Kigali

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We can express our worry - and rightly so - about the fact that Rwanda Franc’s value is decreasing against the US dollar. This will  make imported goods expensive for customers. But, we should also recognise that in today’s world the ‘interconnectedness’ of countries’ economies (specifically trade), makes it impossible for a central bank to have complete control over currencies’ exchange rates.

A common way of keeping a currency from losing value against another is for the central bank to intervene on the buying side to make the franc scarce and, therefore, more expensive and, thus, boosting its value in the process. However, would the current situation really justify such a move, recognising that there’s a whole array of effects related to it, like eating into reserves at the central bank, et al?

My opinion is that the present situation does not warrant such a move (regular intervention in the market by the central bank).

Let’s also be re-assured by the fact that, according to financial and business actors, part of the currency depreciation presently taking place is not structural but temporary (End-of-Year trade activities).

There will at least be some level of rebound/adjustment after the festive season.

 

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Diyana, Gasabo, Kigali

I have always thought that the Rwanda Franc was overvalued. It had remained strong, however, due to aid flows that became the country’s major source of forex reserves.

Time has come for Rwanda to look at reliable sources of forex to avoid similar occurrences. For example, the country can support exporters to ship out more local goods.

We are told every other day that Ministry of Agriculture is doing wonders as far as improved output is concern, but where are our agricultural exports?

Yes, we have done a lot in the past, but we now need to do more of investment in productive sectors and reduce reliance on unreliable sources such as aid and borrowing. I guarantee you, there is no other way.

James, Ottawa, Canada 

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