Country Report The Gambia January 2011

Outlook for 2011-12: Exchange rates

The dalasi is estimated to have depreciated by 2.1% to D28.1:US$1 in 2010 as the dollar strengthened and the current-account deficit widened substantially. Over the forecast period the current-account deficit is expected to fall marginally but to remain wide. Foreign direct investment (FDI) inflows are expected to stay weak as the prolonged downturn in the EU stifles the recovery in tourism-the main recipient of FDI. Overall, the dalasi is forecast to depreciate by 5.4% to D29.8:US$1 in 2011, and by 3.6% to D30.9:US$1 in 2012. A sharper depreciation could occur if political instability were to trigger a sharp drop in tourist arrivals or if the groundnut harvest were to fail.

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