LSL - Lesotho Loti

Overview of the Lesotho Loti (LSM)

The Lesotho Loti is the official currency of the Kingdom of Lesotho. 1 loti = 100 sent (plural: lisente). The name of the currency comes from Sesotho, where "loti" means mountain, while "sente" is derived from the English word "cent."

The Lesotho Loti is pegged to the value of the South African Rand at a 1:1 ratio through the Common Monetary Area, and both currencies are accepted as legal tender in the Lesotho region.

The loti was first issued in 1966, although this currency was not yet in circulation. By 1980, Lesotho issued its first currency with the value of loti and lisente (in 1979) to replace the South African rand, but the rand remained legal tender.

In 1985, the ISO 4217 code for this currency was changed from LSM to LSL.

The history of the Lesotho Loti (LSM)

After Lesotho decided to establish its own monetary system, the Lesotho Loti was officially issued in 1980 to replace the South African Rand. At the same time, the Central Bank of Lesotho was also established to manage, issue, and implement monetary policies.

Initially, the denominations of Lesotho's Loti coins and banknotes were issued with a structure similar to the South African Rand, including small denomination coins ranging from 1 to 50 lisente and 1, 2, 5 maloti, and large denomination banknotes ranging from 2 to 100 maloti. However, this currency system has undergone many fluctuations and changes to modernize and align with the country's economy, including the introduction of the 200 maloti denomination in the 2000s.

The Lesotho Loti currency often features images of national symbols, including portraits of kings, cultural symbols, and famous geographical landscapes of the country. The design of banknotes and coins has evolved over the years to reflect the culture and history of Lesotho.

The currencies that have been circulated and used in Lesotho

Before the Lesotho currency became the official currency, Lesotho went through quite a few different monetary phases depending on the historical context:

• British Pound: From 1868 to 1966, Lesotho was under strict control of British colonizers, and the British Pound was the official currency in use.

• South African Pound: The South African Pound was used in Lesotho along with neighboring countries from the early 20th century until 1961.

• South African Rand: From 1961 to 1980, the South African Rand replaced the South African Pound after South Africa transitioned from the pound system to the rand. 

• Lesotho Loti: From 1980 to the present, Lesotho began issuing its official national currency, but the South African Rand continues to circulate alongside the Lesotho Loti and is also recognized as a legal tender.

Lesotho Loti (LSM) Denominations

The Lesotho Loti is circulated with coins and banknotes with the following denominations issued:

• Coins: 1, 2, 5, 10, 25, 50 lisente and 1, 2, 5 maloti

• Banknotes: 10, 20, 50, 100, 200 maloti

Lesotho Loti (LSM) exchange rate

Currently, the Lesotho Loti is pegged to a fixed exchange rate by the Central Bank of Lesotho. This policy is based on a basket of currencies from countries that have trade, loan, debt repayment, and investment relations with Lesotho. The goal of this policy is to help maintain a stable price level, ensuring inflation control, promoting economic growth, improving the balance of payments, and increasing foreign exchange reserves.

History of Lesotho Loti (LSM) exchange rate

The exchange rate of the Lesotho Loti has also experienced many fluctuations, with the rate against the USD ranging from 0.30 to 0.40 USD = 1 Lesotho Loti. In the 1980s and 1990s, the exchange rate of the LSL/USD was influenced by the stability of the South African Rand and domestic economic factors such as inflation and foreign investment, resulting in slight fluctuations and maintaining an exchange rate of 0.3 – 0.6 USD = 1 LSL.

By the 2000s, the economy of Lesotho had to face challenges and fluctuations in commodity prices, resulting in significant exchange rate differences against the US dollar. The exchange rate of the Lesotho Loti also decreased to around 0.12 – 0.15 USD = 1 Lesotho Loti.

In 2008, a global financial crisis affected all economies, including Lesotho. The Lesotho Loti continues to depreciate against the USD, with the exchange rate reaching 0.09 – 0.12 USD = 1 Lesotho Loti.

From 2010 to now, the exchange rate of the Lesotho Loti against the USD has undergone many fluctuations, especially due to changes in monetary policies of countries and economic factors. As of the end of 2023, the exchange rate of the Lesotho loti against the USD was at 0.055 – 0.065 USD = 1 loti and is showing signs of recovery to date.

Factors affecting the value of the Lesotho Loti (LSM)

The value of the Lesotho Loti (LSL) is influenced by many important economic and financial factors. Some key factors such as:

Global economic situation: The global economy is a crucial factor that directly impacts the value of the Lesotho Loti. Especially the development of Lesotho's main trading partners, which affects the value of the Loti. If the economy of this partner weakens, the demand for exports decreases and the value of the LSL also declines.

Monetary policy of the Lesotho government: The government and the Central Bank of Lesotho intervene directly in the foreign exchange market through fiscal policies and direct intervention measures. These decisions aim to maintain the stability of the Loti's value.

World gold price (XAU/USD): The world gold price is also an important factor as it directly impacts Lesotho's monetary policy. When gold prices rise, the Central Bank intervenes to prevent the LSL from appreciating too much, ensuring a competitive advantage for exporters.

Lesotho's bank interest rates: The interest rates set by the Central Bank directly affect the value of the LSL. If interest rates are high, the Loti can increase in value because it attracts many investors. Conversely, low interest rates can decrease the value of LSL.

With the above influencing factors, a complex picture of the value of the Lesotho Loti in the international market has emerged. Don't forget to follow Gocuco for the most accurate exchange rate updates!