The Gambia's currency, the dalasi, continues to hold its position as Africa's strongest currency this year, according to the central bank governor. The dalasi has appreciated by 0.9% against the U.S. dollar so far, outperforming 23 other African currencies monitored by financial analysts.
The central bank attributes this strong performance to increased inflows from remittances and tourism, as well as external budget funding and disbursements under an International Monetary Fund (IMF) program. The governor anticipates a further rise in the dalasi's value against major trading currencies, primarily the U.S. dollar, due to expected growth in remittances.
In the first two months of this year alone, Gambia received $129.7 million from its citizens residing abroad. This marks a significant increase compared to $507 million in remittances received in 2022. The number of tourists visiting the country also increased substantially last year, jumping to 174,490 from 102,460 the previous year, following a decline to 89,232 in 2020 due to the Covid-19 pandemic.
The tourism season, which runs from October to December, is expected to boost foreign exchange inflows further. In addition to remittances and tourism, the upcoming peanut harvest season is also anticipated to lend further support to the dalasi's strength.
Despite these positive developments, Gambia is grappling with rising inflation rates. Consumer price inflation hit 18.4% in July for the second month running. The central bank governor predicts that inflation will peak in December before falling below 10% by mid-next year.
In other economic developments, Gambia recently concluded a $94-million extended credit facility with the IMF over a period of 39 months. Negotiations for a new program with the IMF are currently underway.
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