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Govt. circular is only reason banks have better rates for foreign currency – bigger problems coming – Jagdeo

Feb 16, 2019 News

It is true that the local banks are offering better rates for foreign currency but that is not a reflection of the non-existence of a problem on the market. The only reason the banks are offering a better rate is because Government has given instructions for them to do so.
That is basically what Opposition Leader, Bharrat Jagdeo, told the media on Thursday, at the weekly press conference held at his Church Street Office.
Jagdeo said, “Everyone knows that out there in the market for notes you have to pay at least $230 to US$1.”
He noted the argument from Central Bank that there is no shortage of foreign currency because you can go to any local bank for transfer and get the money at a much lower rate.
“But what we are not told is that the only reason the rate is lower (at the banks) is because of a government circular, which has forced the banks. They cannot buy beyond $215 and they cannot sell at more than $218.50. So they have limited the spread.”
Jagdeo said that the instructions were given by the “executive”.
He said that the move by the government “is not in keeping with the open market for determining the value of currency. If they remove that circular, you will see how quickly bank transfer will go up to the same $230.
“So if you are a gold dealer or you export gold or rice, you cannot sell to the banks beyond $215 and you bring in your money, you get paid through the bank. That is why the transfers are kept at that rate.
“It is not the true level of the market because a lot has changed; supply has dwindled, foreign currency has dwindled significantly. I suspect things are going to get worse as we proceed.”
Recently, Governor of the Bank of Guyana, Dr. Gobind Ganga, said that there is no shortage of US currency in the banking system.
“There is sufficient foreign exchange in the market. As a matter of fact, for the bank Cambios, we have almost US$50M available for those who want to purchase foreign exchange,” Dr. Ganga told the Department of Public Information (DPI).
He, however, noted that there may be hoarding taking place and coupled with the demand for US dollar notes by foreign nationals, this could be responsible for the claims of currency shortage.
Nevertheless, he stressed the availability of such currencies at the commercial banks.
“You can get a debit card in USD if you are travelling, that is a visa debit card. You can also wire money to wherever you wish to make payments and those are at very good rates, which are hovering around $215… $215.50.”
The Central Bank Governor also reiterated that the country is currently in good financial standing with strong economic indicators.
“The financial indicators are good with respect to inflation. For example, it is just about 1.2 percent exchange rate and is relatively stable. In terms of commercial rates at the commercial bank, as I indicated before it’s just about $215 – $215.50.”
According to Dr. Ganga, the Bank of Guyana is closer to entering into an agreement with an international banking institution to function as the correspondent bank following Bank of America’s withdrawal in July of 2016.

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