This research work explored the impact of Leones redesign on foreign exchange rate in Sierra Leone. It is focused on establishing the extent to which Leones redesign have influenced foreign exchange rate; and the extent to which the Leones redesign has influenced inflation in Sierra Leone within the same time frame. This study however employed Ordinary Least Squares technique of analysis to construct a regression model to test stated hypotheses. Findings revealed that the Leones redesign has no significant impact on foreign exchange rate in Sierra Leone and that the Leones redesign has a significant influence on inflation rate in Leones. The study, therefore, recommends that the export base of Sierra Leone should be strengthened to ensure a sustainable impact and that local manufacturing should be fully encouraged.

CHAPTER ONE

INTRODUCTION

1.1        Background of the Study

Over the years, it has been observed that government in most developing economies have redesigned their currencies on several occasions. Currency redesign was seen as a means by which government attempt to reassert monetary sovereignty. In other words, if citizens lose confidence in the national currency, they may begin to use foreign currencies. This process is popularly referred to as ‘dollarization’. The term Leones redesign or redenomination refers to either to a change in the number of zeros associated with a given currency, or it can apply to the introduction of a new currency. Currency redesign, then,