Local Currency Appreciation

Aug 16, 2019 Letters

DEAR EDITOR,

In recent days, the US interest rates have produced an inverted yield curve, which is a sign of slowing economic activity in the US economy and may possibly trigger a recession.
For Guyana, this could be an opportunity, which triggers local currency appreciation, depending on how the Central Bank and Ministry of Finance handle the US adjustment to interest rates. However, it should also be noted that if our currency and gold reserves are strengthened while simultaneously reducing our debt levels as a percentage of GDP, the opportunity to take advantage of the US economic adjustment will improve.
The projected growth of our oil revenue will substantially aid in also achieving such currency appreciation (via resulting debt to GDP ratio reduction) and given our high dependency on foreign imports, a strong Guyanese dollar should be good for the economy and help maintain inflation under control in the near to mid-term while global trade adjusts. The resulting increased buying power of the Guyanese dollar will also help ease the burden on local salaries and enable households to improve their standard of living. The economy is currently experiencing high unemployment and such an adjustment to monetary policy would have a much awaited positive impact on the lives of many Guyanese. As the saying goes, “a little goes a long way” and in this case it surely will.

Best regards,
Mr. Jamil Changlee

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