Haitian Currency Takes a Dive

Marika Lynch and Jane Regan

PORT-AU-PRINCE — Mariange Pierre-Louis balances a basket of grapefruit, cheerfully tries to sell some, but finds few takersPierre-Louis has had to double the price for a dozen — now up to about 60 cents. She planned to walk around downtown “until I sell them all, if I can.”

”Sometimes the day ends and I still have half a basket left,” she said.

Fruit has become a luxury here, according to Pierre-Louis.

In Haiti, the national currency, the gourde, has taken a dive — losing close to 100 percent of its former value in four months. As the money depreciates, prices have risen, straining the poor in the Western Hemisphere‘s poorest country.

”This is prima facie evidence that just when you think the misery level reaches its maximum in Haiti, additional developments make things even worse,” said Jerry Haar, a senior research associate at the University of Miami‘s North South Center.

Once stable at around 27 gourdes to the dollar, the exchange rate hit 50-1 on Friday.

Analysts say the government is running up high deficits, making investors and consumers lose confidence in the national currency. The situation has been building since last fall — when Haitians sent millions of dollars out of the country after a rumor spread that the government was going to convert dollars in private bank accounts into gourdes.

Haiti‘s economy, which has contracted for the past two years, is kept afloat by remittances sent home from family members in the United States and international aid and loans. Yet aid to the government from international banks was blocked three years ago, after flawed legislative elections, and won’t flow again until Haiti pays off some arrears to the bank and cleans up accounting practices.

Haiti‘s political crisis also is taking its toll on confidence in the currency, as street protests and strikes flourish.

”Between the political crisis and the economic crisis, it’s a very difficult mess. You’re talking about the population living a very difficult crisis,” said Kesner Pharel, a prominent Haitian economist on a fellowship at Harvard University.

Haitians have also lost confidence in the government’s monetary authorities, he said.

Venel Joseph, head of Haiti‘s Central Bank, acknowledged the political impact Friday at a press conference.

”You know that the political situation has an overall influence on exchange rates. That is perhaps [a reason] that people panic. People don’t see where things are going, economically, politically,” Joseph said.

Joseph said the bank will ”intervene” in the market to stabilize the gourde, but he didn’t say how specifically. He did say the bank will raise the interest rates on its bonds.

Typically, a government could use its reserves to stabilize the currency, but even those have dwindled in Haiti, Kesner Pharel said.

President Jean-Bertrand Aristide has promised to push through a minimum wage hike — raising it to about $2 an hour, but even the value of that increase has slipped.