What Is the Liberian Dollar (LRD)?
The term Liberian dollar (LRD) refers to the official currency of the Republic of Liberia. The currency was introduced in 1847 after Liberia became an independent nation. It is printed and its value is maintained by the Central Bank of Liberia, which was established in October 1999. This currency circulates alongside the U.S. dollar due to the strong historical ties between Liberia and the United States of America. It is represented by the symbol L$ in the foreign exchange market.
- The Liberian dollar is the national currency of the African Republic of Liberia.
- The currency is printed and its value is maintained by the Central Bank of Liberia.
- Although it is not pegged to any currency, Liberians use the Liberian dollar alongside the U.S. dollar.
- It isn't uncommon to receive a mix of change in both Liberian and U.S. dollars when executing transactions.
Understanding the Liberian Dollar
The Liberian dollar is Liberia's official currency and is represented by the symbol L$. It is not pegged to any other currency. It is maintained by the country's central bank, which authorizes the printing of banknotes and the minting of coins. Banknotes in circulation are issued in $5, $10, $20, $50, and $100 denominations. One LRD is divided into 100 cents. Coins come in 5, 10, 25, and 50 cent denominations. The country also has L$1 coins in circulation.
Liberia began to use the LRD as its official currency when it gained independence from the Amerian Colonization Society in 1847. It was one of the first things the government did to move the country forward. At the time, the LRD circulated with the U.S. dollar (USD) until 1907, at which point the government adopted the British West African Pound Sterling as legal tender. The government reissued the Liberian dollars to promote Liberian economic independence with the second issue of the LRD in 1943.
The LRD was pegged to the USD until 1907, at which point they were tied to another at parity. Although the two are no longer pegged, Liberians continue to use the USD along with their own currency. Smaller transactions—those that amount to less than $5—are executed in the LRD. The USD, on the other hand, is used to make purchases for anything above that amount. It isn't uncommon, though, to receive change in both U.S. and Liberian currency from merchants.
People who use cash should make sure their U.S. banknotes are in good condition and are relatively new as it is fairly common for merchants to reject worn and/or older bills.
Liberia is one of the poorest countries in the world and has a high level of unemployment. It ranks in the 165th spot on the 2020 Index of Economic Freedom, with a high government tax burden and a low level of fiscal health. The World Bank estimated an economic contraction of 1.4% in 2019 after the country saw relative growth of 1.2% in 2018.
The country went through a financial crisis in 1980 after a coup d’etat and the assassination of President William Richard Tolbert, Jr. Wealthy individuals started to import mass quantities of U.S. banknotes and the Liberian economy went through a period of hyperinflation. Under the leadership of President Samuel Doe, charges of government corruption resounded. Amos Sawyer became the head of the government in 1990 after Doe's assassination.
Rather than attempting to deflate against the U.S. dollar in Liberia, Sawyer tried to introduce the Liberian dollar as the only legitimate currency for use. His economic policies were marginally successful in returning Liberia to a modicum of economic stability and fiscal solvency.