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Exchange rate for US dollar climbs
Something is happening to the US dollar on the local market.
In recent weeks, the rates have been climbing.
At the banks, the buying rate for notes was between $207-$208 for US$1, the selling rate was $210 and $211. On the streets, the rates were much higher.
The exchange rate at a King Street cambio on Friday.
At L. Mahabeer and Son Cambio, on King Street, one of the more prominent of the money exchange operations, US cash was being bought for $216 and sold for $219.
There are reports that it is sold much higher on the streets because of a shortage in cash.
On Friday, Governor of Bank of Guyana, Dr. Gobind Ganga, acknowledge that there is a shortage of US currency.
At Demerara Bank, the rates for transfers on Friday was buying $208 and selling $213.
At GBTI, it was $208 and $211, according to its website.
The local US cash supply had been badly affected in 2016 after Bank of America announced it was ending its relations as a correspondent bank to Guyana.
The move had come as the US banking giant cut its risks in the Caribbean amid ongoing concerns over anti-money laundering activities.
Low profitability, concerns about reputations, and increased Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) scrutiny have all contributed to concerns about de-risking.
The climbing US rate has not been helped by a contraction of the underground economy due to a tightening up by authorities.
The US’ Drug Enforcement Administration (DEA) opened its office in early 2016 with a number of busts highlighting what has been described as success for them.
However, the absence of cash from the drug transactions has deeply impacted the situation, affecting the rates.
However, another side of the story of what is leading to the cash situation is emerging.
According to cambio and street operators, there has been a steady demand from embassies and other companies which are paying workers in US currency.
There is growing evidence too, that the thousands of US dollars coming here from Cuban traders have not been making it to the normal system.
It was reported that 1,000 Cuban are coming here to shop weekly. That translates to at least US$4M monthly coming from that Spanish-speaking country in trade.
They come with mainly US dollars. The monies are not really going to the cambios or the banks.
The US dollar exchange rate for notes have been rising in recent weeks.
Rather, it has reportedly ended up in the Chinese stores that the Cubans shop at.
According to officials, there have been warnings for the Chinese not to accept US but it appears that Central Bank and other authorities are unwilling to clamp down.
The Cubans have been utilizing the no-visa arrangements here, while staying in guest houses, eating and using transportation.
The cash from the trade is quietly gathered up and shipped out, other than legal means, to Suriname and other countries, Kaieteur News has been told.
At least one large Chinese trader has been named as the business that has been helping to sop up the US dollars.
Trinidad companies operating here have also been known to have been aggressively buying up the US currency.
The rise in the US dollars is deeply worrying as it ultimately affects the prices of goods coming in.
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