HTG (Haitian Gourde) and History

What is the Haitian Gourde (HTG)?

The Haitian gourde is the national currency for the Republic of Haiti. The name, gourde, is French, though it is based on an old Spanish currency called gordos. The Haitian gourde subdivides into 100 centimes, and the symbol G represents the currency. The currency code is HTG, and the currency's value floats against other currencies.

As of February 2021, 1 U.S. dollar is worth approximately 72 HTG.

Understanding the Haitian Gourde

The Haitian gourde is a floating currency now, but it was formerly pegged to the French franc and U.S. dollar (USD). The Bank of the Republic of Haiti manages the currency and monetary policy for the country.

Demand for the Haitian currency is low outside of Haiti, as the country is financially small and not a large exporter. A large portion of the population relies on subsistence farming to survive. About half of the country's annual budget is met by foreign aid.

In 2009, Haiti qualified for debt forgiveness, and more than $1 billion in debt was forgiven by the International Monetary Fund (IMF) and World Bank.

Coins are are circulated in denominations of 5, 10, 20, 50 centimes, as well as one and five gourdes. As for banknotes, denominations include 10, 20, 25, 50, 100, 250, 500, and 1,000 gourdes.

History of the Haitian Gourde

The Haitian gourde first circulated as a currency specific to Haiti in 1813. Before its introduction, the country used the colonial livre. The livre was pegged to the French livre at par, or one colonial livre to one French livre. The livre divided into 20 sous, and 15 sous equaled one Spanish colonial real. In this way, the colonial livre was essentially pegged to both French and Spanish currencies.

Introducing the first Haitian gourde in 1813 was a step in acknowledging the greater independence of Haiti. The gourde replaced the livre at a rate of eight livres and five sous for every one gourde. This exchange rate complicated currency conversions. During the first and second issues of the gourde, it fluctuated with the pegged currencies. As the franc rose to become the primary currency in France in 1881, the gourde pegged to the franc at a rate of five French francs to one gourde.

The second issue of the gourde was due to revaluing the currency in 1870. The government issued banknotes for this new gourde in denominations of 10 and 25 gourdes, but coins were not released.

The issuance of the third gourde happened in 1872 and is still in use today. Once again, revaluation of the gourde caused the new currency issuing. The third gourde exchanged at a rate of 300 second-issue notes to one third-issue note. Pegging for the third gourde was to the French franc and later to the USD.

In 1912, the gourde was pegged to the USD at a rate of five gourdes to one dollar. This rate of exchange caused the use of calling five gourdes a Haitian dollar, and five centimes a Haitian penny. The gourde subsequently un-pegged from the USD in 1989 and now floats freely against world currencies.

Brief History and Economic Background of Haiti

Haiti sits on the island of Hispaniola. The country shares the island with the Dominican Republic. It was a Spanish colony between 1492 and 1625, then fell under French rule until 1804. Haiti started to fight for independence in 1791 through a revolt of self-liberated slaves. They would realize their dream in 1804; however, the U.S. and most of Europe did not recognize the country. At first the island was divided, but it would form a unified republic by 1859.

Distribution of wealth in Haiti is an ongoing issue. Haiti is one of the poorest countries in the Americas, and the island lacks adequate healthcare, education, and has poor infrastructure. Corruption in the government has led to the limiting of aid to the country.

Gross domestic product (GDP) oscillated between 1.2% and 1.5% between 2015 and 2018, with -9.87% in 2019 and -4.11% in 2020. Inflation was 6.7% in 2015, 12% in 2016, 11% in 2017, 12.4% in 2018, and 18.7% in 2019 according to World Bank data, and rose to 22.4% in 2020.

Example of HTG on the Forex Market

Assume that the exchange rate for the USD/HTG currency pair is 113.4. This means it costs 113.4 gourdes to buy one USD.

The exchange rate had hovered near 40 from 2004 to 2014. Back then, the HTG was stronger since it took fewer gourdes to buy one USD. Starting in 2014, the HTG began to decrease, moving close to 100 in 2019. If the rate continues to move above 113, it would mean the HTG is continuing to weaken, as it costs more gourdes to buy one USD.

To find out how many U.S. dollars it takes to buy one gourde, divide one by the USD/HTG exchange rate. For example, divide one by 113.4. This produces the HTG/USD rate (notice the codes have flipped) of 0.0088. That means that one gourde will buy a little less than US $0.01.