What Is the Haitian Currency and How Is It Used?

Haiti’s currency plays a crucial role in its economic landscape, shaping local commerce and international trade. As the country grapples with financial challenges, understanding the dynamics of its currency is critical for residents and businesses.

Official Currency Status

The official currency of Haiti is the Haitian gourde (HTG), legal tender since 1813. The Bank of the Republic of Haiti (BRH), the central bank, issues and regulates the gourde to maintain monetary stability. The gourde is divided into 100 centimes, though centimes are rarely used due to inflation.

Historically, the Haitian government pegged the gourde to the U.S. dollar to stabilize its value and facilitate trade. This peg is flexible and influenced by economic conditions and monetary policy. The BRH intervenes in the foreign exchange market through tools like open market operations and foreign currency reserves to reduce volatility and maintain confidence in the gourde.

In recent years, political instability, economic mismanagement, and external shocks have caused the gourde to depreciate, increasing reliance on the U.S. dollar for larger transactions, a phenomenon known as dollarization. Despite this trend, the gourde remains the official currency for domestic transactions, and businesses are required to display prices in gourdes, even if they accept other currencies.

Denominations and Monetary Units

The Haitian gourde is available in denominations that support various types of transactions. Commonly circulated banknotes include 10, 25, 50, 100, 250, 500, and 1,000 gourdes, while coins, less commonly used due to inflation, are minted in 5 and 10 gourdes. The BRH oversees the design and issuance of these denominations to meet economic demands and deter counterfeiting.

The denominations reflect practical considerations, accommodating both small-scale purchases and significant transactions. The 1,000-gourde note is often used for larger exchanges, while smaller notes like the 10 and 25 gourdes are common in everyday transactions, reflecting the diverse purchasing power and needs of the population.

Exchange Rates

Exchange rates play a pivotal role in Haiti’s economic interactions with the global market. The value of the Haitian gourde against major currencies like the U.S. dollar and the euro fluctuates based on domestic policies and external market forces. These shifts influence the cost of imports and exports, affecting consumer prices and businesses dependent on foreign goods.

A depreciating gourde raises the cost of imports, impacting local businesses and consumers. Conversely, it can make Haitian exports more competitive by lowering their prices in foreign markets, though rising import costs often offset this advantage. Businesses involved in international trade often use financial tools like forward contracts or currency swaps to mitigate exchange rate risks.

The BRH closely monitors exchange rates to guide monetary policy and control inflation. During periods of rapid depreciation, the central bank may raise interest rates to attract foreign investment and stabilize the currency. However, these measures must be balanced against potential drawbacks, such as reduced domestic borrowing and slower economic growth.

Domestic Market Acceptance

The Haitian gourde remains integral to local markets and daily transactions, despite the increasing presence of foreign currencies like the U.S. dollar. Government regulations mandate that businesses display prices in gourdes, ensuring its continued relevance.

From street vendors to larger retailers, local enterprises rely on the gourde for their operations. Businesses adapt to currency fluctuations by adjusting their pricing strategies or offering incentives for payments made in gourdes, maintaining accessibility for the broader population.

Cross-Border Transactions

Haiti’s economy relies heavily on cross-border transactions, given its dependence on imports and its significant diaspora community. However, the Haitian gourde has limited utility in international dealings due to its weak global acceptance. Foreign currencies, especially the U.S. dollar, dominate cross-border trade and remittance flows, shaping Haiti’s foreign exchange reserves and monetary policy.

Remittances from the diaspora, which account for a substantial portion of Haiti’s GDP, are primarily sent in foreign currencies and converted into gourdes upon arrival, injecting liquidity into the local economy. Fluctuations in the exchange rate between the U.S. dollar and the gourde directly affect the purchasing power of remittance recipients.

Trade relationships further illustrate the limitations of the gourde in international transactions. Haitian exporters often price goods in U.S. dollars to remain competitive, while importers require foreign currency to pay for goods. This creates a dual-currency environment where businesses face exchange rate risks and additional transaction costs. For example, a Haitian importer purchasing goods from the United States must account for potential gourde depreciation during the payment period, which could increase the overall cost. To manage these risks, some businesses utilize financial instruments or maintain foreign currency accounts.