Díli, May 13, 2025 (Lusa) - The Central Bank of Timor-Leste (BCTL) is monitoring the behaviour of the US dollar, but stressed that the recent devaluation will have no impact on the country's foreign trade, the governor of the financial institution, Hélder Lopes, said on Tuesday.
"Currently, we are satisfied because the US dollar remains strong against the [Indonesian] rupiah. Imagine if the USD were to devalue against the rupiah, when we import goods from Indonesia, prices would start to rise," he explained, when questioned by journalists.
The official also said that most of Timor-Leste's foreign trade is with Indonesia, and as long as the USD remains strong against the Indonesian rupiah, the country will continue to benefit from this advantage.
"We hope that the USD stays strong to facilitate our imports. However, when the USD is strong, it also makes it more expensive for other countries to buy our products, which hurts exports," he emphasised.
Even so, the governor explained, the Central Bank continues to monitor the USD's devaluation against the pound sterling and the euro and any "effects and complications".
The Central Bank governor was speaking to journalists at the end of a meeting with Timorese President José Ramos-Horta at the Presidential Palace in the capital, Dili.
Asked about the meeting with the head of state, Hélder Lopes said that the possibility of Timor-Leste using "its own currency or continuing to use the USD" was discussed.
"In order to use our own currency, a consensus is needed between the leaders to ensure that, once adopted, the new currency works well," he said.
Timor-Leste adopted the USD in 2002 with the restoration of independence.
In a study released last December, the International Monetary Fund said that the USD has helped Timor-Leste achieve low and stable inflation, but that it may be contributing to "weakening private sector competitiveness".
"With trade increasingly orientated towards ASEAN [Association of Southeast Asian Nations] and the end of oil production, the cyclical factors that influence the Timorese economy will be less and less linked to the United States, which increases the cost of using the USD," the study says.
The study emphasises that in order to improve economic performance with the USD, Timor-Leste needs to reduce budgetary imbalances and make reforms that " tackle the structural bottlenecks affecting the private sector".
"Although the choice of exchange rate regime belongs to the authorities," the IMF considers that those reforms are important, both to strengthen the economy with the use of the USD and as prerequisites for the introduction of a domestic currency.
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