By Zainab.joaque@awokonewspaper.sl
Freetown, Sierra Leone – Commercial banks in Sierra Leone conducted foreign exchange transactions totalling US$370.21 million during the first quarter of 2023 (Q1 2023). This figure represents a 7.8 percent decrease compared to the corresponding quarter in 2022 and a 6.6 percent decline from the final quarter of 2022.
The foreign exchange market in Sierra Leone encompasses both the official market, which includes banks and foreign exchange bureaus, and the parallel market, which also involves some official institutions, notably the foreign exchange bureaus. While data on parallel market turnover is not available, the Central Bank noted that anecdotal evidence suggests that it is more substantial and more liquid than the official market.
During Q1 2023, commercial banks purchased US$211 million and sold US$160 million worth of foreign exchange. These transactions contrast with an average quarterly remittance inflow of approximately US$125 million. Banks typically acquire foreign exchange from various sources, including the mining sector, the service industry, foreign exchange bureaus, and international organizations, predominantly non-governmental organizations (NGOs), as reported in the Central Bank’s Monetary Policy Report.
Foreign exchange obtained from remittances is usually procured directly from remittance companies or indirectly through foreign exchange bureaus. Commercial banks typically sell foreign exchange to importers, including rice importers, oil marketing companies, and businesses in the service industry.
The Monetary Policy Report also revealed that deposits into customer foreign exchange accounts reached US$576.69 million during 2023Q1. Concurrently, withdrawals from customer foreign exchange accounts amounted to US$346.53 million, resulting in a net increase in foreign exchange balances of approximately US$230 million. These figures represent a notable increase, with receipts and withdrawals growing by 37.3 percent and 30.9 percent, respectively, compared to the same period in 2022. ZIJ/12/9/2023