The US dollar is going through the roof

May 04, 2014 Features / Columnists, My Column

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Last week a relative of mine wanted some US dollars to buy because she was returning home with some money that she had collected from her business in Guyana. She called me and I directed her to a cambio which I knew would offer her the best possible rate.
She called me to inform me that she needed more money because the rate was $210 to the US dollar. I was surprised because I remembered that a few weeks ago people were paying $213 to the US dollar, but that the rate had come down.
That issue was past when someone called me and during the conversation, informed me that the exchange rate is going to reach astronomical proportions in the not too distant future. I said that I expected the rate to go up because of the economic norm of scarcity and demand. However, I decided to look at the situation with the local currency, and I was certainly not amused.
A few years back the then President Bharrat Jagdeo had assured the nation that money was coming into Guyana. There were the international donors who were contributing to national development and since the local economy was booming then there was money coming in by way of export earnings.
I had long noticed that remittances were down largely because of the constriction in the United States economy. In addition, fewer Guyanese were looking back, so instead of sending money home to prepare for their winter years they were simply keeping their money for themselves. The few who wanted money to do business back home, simply found an overseas-based Guyanese who had a local account. The Guyanese would give the United States dollars to the Guyanese who would call somebody back home and ask them to hand over local currency. The foreign currency was remaining in the United States.
However, just a few days ago I was made to understand that what is happening now with the exchange rate is child’s play. Failure of the country to pass the Anti-money laundering Bill would see a further spike in the exchange rate. For one, people overseas are going to find it increasingly difficult to send money home; Guyana is going to have a problem conducting business, since it is going to find it difficult to send money abroad for its transactions.
The result is that foreign currency would become even scarcer. The offshoot would be that goods from the United States would suddenly even cost more. Someone actually told me that we are buying a lot of things from China so the cost factor would be minimized. The truth is that no matter what, most currencies are linked to the United States dollar.
There is also the issue of the cost of travel. Without a doubt, airline tickets are calculated in United States currency, so people are going to pay more for their tickets. Already people are paying a lot of money to travel but then again, those who travel are those who can afford to.
The average Guyanese would be faced with rising prices and a relatively stable salary. The pay increase they get is supposed to counteract inflation, but somebody needs to tell the administration that there are many things that suddenly cost more. Just this past week gasoline prices went up by just over $50 a gallon.
It is widely expected that the political opposition parties are not going to vote in favour of the Anti-money laundering Bill. There were many reasons, but now the façade has been wiped away. Cabinet Secretary Dr Roger Luncheon said that the opposition parties informed him that the issue is political rather than legal.
I did have a chat with a leading member of the political opposition about passing the Bill and he said to me that the government is intransigent. I then asked whether it is wise to hold the nation to ransom because of some conflict with the government. The politician merely said that the people would recognize that the government is responsible for whatever happens.
Of course I argued that Aunt Millie would be angry with the opposition when she cannot get her small piece from Cousin Fred in Brooklyn. My political friend simply said that if the people are prepared to blame the opposition, then they deserve the kind of government they get.
He then told me that the falling gold price is partly responsible for the rising price of the United States dollar, but that there is something about the Guyana-Venezuela relationship that is going to push it up even further. He said that this would be revealed within a few days.
If the truth be told, there are many who are prepared to back the opposition because, as they say, the government has done a lot to hurt the nation. These people point to the level of corruption, to the broken promises, and to the deception. I know about some of the deception. There I was at a press conference when Winston Brassington told me that by the end of last year the nation would be informed about the private investor who would come with his US$8 million to help fund the Marriott construction.
It is now May and I am still to be told about this private investor. What is more, I am still to be told about the source of money that is funding the continued construction of the Marriott Hotel. I was shocked when I found out that no Guyanese were employed on the hotel construction. Then I was told that that situation would change. It has not.
Someone is still to explain the newfound wealth that some people are exhibiting. Clement Rohee did say that some people saved and saved. Many people did too, but could in no way amass any wealth. However, with the leaders of the other Caricom countries coming to Guyana to help promote the passage of the Bill, the situation ahead must be bad. I wish somebody here would take a step backward and ensure the passage of the Bill.

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