20887: Raber: Re: 20858: donnasteiner: Exchange Rates 3/26 in Ouanaminthe Haiti (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: P&M Raber <raber@valkyrie.net>

>From my days in Haiti when the exchange rate slowly rose up from 14 gourdes
to 1 dollar to 28 gourdes to 1 dollar, I was also perplexed by the way
prices changed.  The minute the gourde devalued, prices would go up but it
always took days or weeks for prices to fall.  Of course the gourde rarely
gained value on the dollar.  Here is what merchants told me:

Most do not have dollars piled up somewhere.  They use the incoming sales to
purchase dollars for the next stock.  If the dollar goes up, they
immediately change prices so they can order the next round of goods.  On the
other hand, if the dollar goes down, you cannot trust that it will stay down
so you take your time to change prices.  If you adjust your prices down
immediately and the down fluctuation is only temporary, you will not be able
to buy your next order.   I am sure this does not apply to big retailers
like Caribbean Supermarket who have the dollars sitting around an most
likely make extra profits when the gourde gains value.    It will definitely
apply to the little market lady who buys 100 pounds or rice to resell by the
tin can.   That little merchant way up in the hills often goes bankrupt when
the gourde devalues.  She is not aware that prices have gone up in town
until her next trip to the distributor.  There she finds out that the money
she saved to buy a new sack of rice is not enough.  The rest of the
merchants fall somewhere in between. the little retailer and the big
companies   Some are more ethical then others. When the price of gas had
jumped up (I think it was in 2000), many gas stations shut their doors for a
day or two before the price change in order to make more profit.  For those
who don't know, the resale price of gas in Haiti is set by the government.
Some however kept on selling and had long lines at their stations.  I know
that one of those who did the right thing was protected by neighborhood
people and youth during the Koupe Tet, Boule Kay rampage of the chimeres
during the last days of the Aristide regime.  The youth actually kept
putting out fires set by the chimeres.

I have one theory as to why the dollar lost half its value abruptly.  It may
be due to the fact that many Haitians were hoarding dollars with the
instability of the last few months.  Even poor people who received transfers
could not go to a bank to cash them in or exchange them.  A family I know
had 500 dollars in cash in the home. These are poor people with jobs and a
sibling in the States.  Thugs broke into the home, stole the dollars, and
raped two girls in the process.  Supposedly the thugs went around the
neighborhood stealing cash and raping.  Now that  the country has reopened,
those dollars sent from the states these past 6 weeks, plus those new family
transfers from the US, plus those of the foreign troupes are flooding the
market.  Many big retailers who are big dollar buyers are probably not
ordering anything right now.  Some who have lost thousands in customs are
probably out of business.  It's a supply and demand issue.  The economy is
in "bubble" Haitian style.  The gourde will most likely climb backup some
before it goes down again.

The sudden drop of the gourde is just reflecting political events and
consumer usage patterns.  The closest thing to it in the US would be with
the price of gasoline at the pump.  Gasoline is basically the only item in
the US affected by world events.  Prices can go up one hour after an event
in Venezuela or the Middle East and later take weeks to drop.