Haitian Money - Why has the Haitian currency depreciated so much in value?

When I was a child growing up in Haiti, my father used to tell me how expensive life was (tout bagay shè) and how cheap life was 'back in the days' when he was a child growing up in Haiti...

"lavi-a te dous pitit... nan tan lontan... twa ze pou YON kob wi..." (back in the days I used to buy 3 eggs for 1/5 of a penny) my father would say!

I didn't even know what "YON kob" was... It didn't exist when I was born.

Dollars & Cents Vs. Gourdes & Kob

When I was growing up, although my father thought life was expensive, one U.S. penny was '5 kob wouj', a nickel was 25 kob, a dime was 'ti 50 kob ameriken', everyone had a few on hand in case you had to make a call from a public pay phone in the capital Port-au-Prince.

A U.S. quarter was 'Goud e ka' (1.25 Gourdes) and 5 Goud was equivalent to ONE U.S. Dollar. it was written right on the currency.

That's where the term 'Haitian Dollar' comes from. Did you know that?

When I was growing up, the Haitian Gourde was paper money... Nowadays, ONE Haitian gourde is worth about TWO American Cents and 5 Gourdes is a coin... pocket change...

What causes the Haitian currency to depreciate so much in value?

Well... Based on my research, it boils down to this... (Note that this is only one factor)

Haiti IMPORTS most of the goods it needs from foreign countries like the United States and the Dominican Republic. In order to buy those goods, Haitians must first BUY these nations' currencies (i.e. the U.S. Dollar / the Dominican Peso). Because of that, those currencies will be appreciating in value while your Haitian Gourde depreciates in value.

Double purchase: Buy the Dominican Peso to Buy Dominican Goods...

One of the biggest businesses in the Haitian-Dominican border is not just the products being sold for import into Haiti but currency trading going on. You have to buy the Dominican peso with your Haitian Gourde first before you can buy the Dominican products you need.

Ditto for American goods...

A Haitian entrepreneur in Port-au-Prince tells me whatever come in through her warehouse is paid for in U.S. Dollars. which is why everyone who buys from her has to pay 'au taux du jour'

It is said that countries with the lowest price levels tend to have the strongest currencies. If this is true, then it safe to assume that countries who import everything and have nothing to export will have the the weakest currencies.

Keep in mind: ONE Haitian Gourde is now only worth 2 Cents U.S. (USD $0.02) instead of 20 cents 30 years ago.

Do you agree that IF ONLY Haitians can feed themselves, if Haiti can grow enough food to feed the population, there will a tremendous decrease on the demand for foreign currency and that alone might boost the value of the Haitian Gourde?

I am not an economist... What do I know?

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