Evidence points to US dollars heading also to Suriname

Apr 14, 2017 News

– PSC describes exchange rate as unnerving

Local businesses have described the current foreign currency trading situation as unnerving.
On Monday last, the Private Sector Commission (PSC) met with the Governor of the Bank of Guyana, Dr. Gobind Ganga, on the foreign exchange issue and related matters.

Central Bank governor, Dr. Gobind Ganga, meeting with PSC representatives on Monday over the foreign currency situation.

During the meeting it was disclosed that there is evidence of precious foreign currency making its way across to Suriname via businesses which would have collected same in payment for goods. If true, it would lend credence to several claims that the local foreign trade is being pressured from different directions, not least neighbouring countries which badly need the US dollars to conduct their business, and from lower exports.
Local businesses have been complaining of difficulties and delays in wiring money with some waiting for weeks.
PSC, reporting on the meeting with Central Bank, said yesterday that the Governor assured the Commission that there is an adequate supply of foreign exchange. He also provided statistical evidence to support this position.
“Also, Dr. Ganga explained that the Guyana dollar should remain relatively stable due to the current low price of imports of petroleum and petroleum products which more than offset the decline in export receipts.”
According to the PSC, the Governor believed that persons and businesses should not pay more than $215 to $218 for a US dollar. He conceded that there is currently a relatively short waiting period for persons who wish to purchase foreign currency.
“He also cautioned that demand should be screened to establish the legitimacy of the requests.”
PSC reported.
“The Governor revealed that the Bank is exploring reports that foreign goods, meant for another country, were being paid for using foreign currency sourced from Guyana. In addition, there were some flows of foreign currency to Suriname by businesses who collected US$ in payment for goods.”
PSC said it pointed out to the Governor that Guyana enjoyed a stable rate of exchange over several years and the present change is unnerving.
“Notwithstanding, the Governor pointed out that even with all the speculation in the market, the depreciation of the Guyana dollar was modest. The Commission promised to collaborate with the Central Bank in regular monitoring of the system to defend the currency against speculative threats.”
After hovering for years around $205, the exchange rate in the last quarter of 2016 started to climb. A number of factors have been blamed. According to Government, export revenues fell over US$30M last year. Nationals of two neighbouring countries also – Trinidad and Barbados – were accused of trekking to Guyana to buy up US dollars.
Central Bank has since halted their trading of currencies to those territories.
There were also indications that at least one major money transfer business from Trinidad did not sell its foreign currencies to the commercial banks, but instead circulated it among its sister companies.
Businesses have also been reporting that hundreds of thousands of US dollars are coming weekly from Cuban shoppers who come here to trade, but have not been making it to the banks. Rather, these are being taken out of Guyana to neighbouring Suriname where a number of businesses have linkages.
As one of the measures to halt the slide of the dollar, Central Bank has ordered cambios -the licensed foreign currency dealers – not to have more than a $3 spread between the buying and selling rates. However, despite the measures, there has been deep worry over the availability of foreign currencies, especially at the banks, to pay for goods and other services.
Businesses have been claiming to pay over $220 and in one case, for credit cards, one bank had even advertised a $230 rate.

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