The Haitian gourde continued its prolonged depreciation against major currencies in 2020, driven by a combination of structural economic weakness, political instability, COVID disruptions, and limited foreign exchange earnings. The currency’s decline translated directly into higher prices for the imported goods on which Haitians depended for everything from food to medicine to fuel, compounding the economic suffering of households already devastated by years of crisis.
The Bank of the Republic of Haiti attempted to manage the depreciation through interventions in the foreign exchange market, but its ability to do so was constrained by limited reserve holdings and the ongoing outflow of foreign exchange from a country with few significant export earnings. Remittances from the diaspora provided crucial foreign exchange inflows, but they were insufficient to fully offset the downward pressure on the currency.
For business operators in Haiti, the currency depreciation created a constant cost management crisis. Businesses that imported goods or equipment faced rising costs in gourde terms that they could not always pass on to customers whose own purchasing power was declining. Margins were squeezed, investment was deferred, and some businesses simply stopped operating.
Economists studying Haiti’s currency situation argued that long-term exchange rate stability required fundamental improvements in the country’s economic fundamentals: increased domestic production, export development, investment attraction, and governance improvements that would reduce the political risk premium embedded in investors’ and businesses’ assessment of Haiti. These improvements, however necessary, required precisely the political stability that continued to be absent.