Central Bank empowered to give guidelines on currency spread

Central Bank empowered to give guidelines on currency spread – Govt. officials

Apr 08, 2017 News

It appears that the Government is sticking to the guideline provided by Central Bank to have

Central Bank Governor, Dr. Gobind Ganga

operators use a $3 spread between the buying and selling rate for foreign currency. According to officials at Central Bank and the Ministry of Finance, the Governor of the Bank of Guyana, Dr. Gobind Ganga, is within his right. He is operating with his legal remit to issue such a guideline on the foreign currency.
The officials stressed that the point or motive behind the guideline was to ensure the stabilization of the foreign currency market. The Government officials also objected to statements made by the political opposition that the Central Bank and Minister of Finance, Winston Jordan, issued a “threat” to cambio operators to obey the $3 spread. They maintain that this is false and never occurred.
According to the PPP, the measure by Central Bank is of tremendous concern. The party had said that it viewed the measure, as high handed and unconstitutional. “It must be noted that these cambios operate under specific laws and any attempt to force these cambios to buy or sell currency at specific rates is in violation of the law,” PPP said in a statement issued by Irfaan Ali, a senior Parliamentarian.
It was pointed out that the country’s foreign currency market operates based on a floating exchange rate and is therefore determined and influenced by demand and supply.
”The Minister of Finance cannot fix the rate based on his own wishes. As has been noted by many businesses there is a shortage of US currency in the economy. To address this, the Central Bank needs to address the supply side and not dictate against the realities of the market,” PPP insisted.
But the Finance Minister in support of the Central Bank Governor stated that he was doing what every Central Bank Governor in the world does and is in keeping with the law.
The PPP is also arguing that the economy is weakening. It said that the currency is going to continue to lose value. This, coupled with reduction in foreign direct investments (FDI) and severe shortfall in foreign currency earned from export trade for forestry and agriculture, will have an impact.
The situation will only get worse, the PPP statement said.

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