If you belong to the economic school of thought who believe that a currency is a window to the economy, then you are closer to understanding the mechanics of currency valuation. Currency is deliberately devalued by economic policy makers as strategy to facilitate the generation of revenue by making goods cheaper to countries with stronger currencies. The economic rationale is to boost foreign currency reserves where they are in short supply.
Sierra Leone’s currency, the Leone, was relatively stable from 1980 through 1984. The Leone lost 51% of its value to the Dollar between 1984 to 1985. It dipped further by 68% in 1986. Between 1989 and 1990 it dipped by 61% in a year. In the 11 year period under review, the Leone lost 99.3% of its value. The exponential decay reveals a lack of strategy to contain the free fall. These were extremely tough years in Sierra Leone and probably accounts for the subsequent political upheavals that further destabilized its already fragile economic foundation.
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