Four reasons for the foreign exchange crisis in Guyana

Mar 27, 2017 Letters

Dear Editor,
Everyone is blaming each other for the Exchange Rate for the U.S dollar.
The Private Sector, the Government and the people are all confused. Everyone is blaming the other for the exchange rate. Four factors contributed to the exchange rate crisis and the shortage of US dollars.
1. There are less exports, so less US money coming in to the economy.
2. There is more demand for US currency from importers who are importing all types of stuff that are not essential to Guyana, hence a wastage of foreign exchange. Why do we need 12 different brands of corn beef, sardines, cooking oil, flour, etc. Used tires, motor vehicle imports, soft drinks imports, alcoholic beverages etc. also contributed to the shortage and high exchange rate.
These imports should be monitored. There is a lot of duplicity of products imported.
3. The Cuban traders bring in almost US$5 million each week; that is about US$20M per month on average to purchase goods from strictly Chinese businesses. These U.S dollars are not ploughed into the local economy as the Chinese businessmen keep it for their own use. Besides the Chinese are running cambios in their businesses by buying US$ at G$215 to G$220. They are not selling, only buying. So enterprising business people would buy US$ at G$210 to G$214 from registered cambios and the commercial banks and sell these to the Chinese businessmen at G$215 to G$220 thus creating a shortage in the foreign exchange market.
The Chinese businessmen are backed by large consortiums in China and even by the Chinese Government. Can the Bank of Guyana carry out an audit on Chinese businesses to see if they wire transfer US$ to China for purchases and if they do so, are they real companies or fake companies just to receive cash?
4. Finally, in the last few months Trinidadians flooded the local cambios and commercial banks buying out as much US$ as possible contributing to the shortage as US$ is fetching TT$6.75 in Trinidad for each US$. There is a shortage of US$ in Trinidad. Guyana should have never had a shortage or a rise in exchange rate if not for the above.
Balwant Persaud

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