Central Bank halts buying of TT, B’dos dollars

Dec 09, 2016 News

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– evidence suggests some applications for US$$ not legit

Central Bank has temporarily halted its buying of foreign currencies from Barbados and Trinidad

and Tobago as a measure to ensure local supplies are not threatened.
The disclosures were made yesterday by Governor of the bank, Dr. Gobind Ganga, who also dismissed worry that the foreign currency demand is anywhere near a chronic situation.
During a press conference at Bank of Guyana, Avenue of the Republic, the official said that the current situation is being sensationalized, with intermittent shortages in supplies a normal thing in the business.
The press conference would come after a number of local businesses and citizens claimed earlier this week of difficulties in acquiring foreign currencies and remitting US at the commercial banks.
Other analysts have pointed to crisis situation in coming months after a number of key sectors underperformed despite the continued shine of gold production. This was made worse by a clamping down on the illegal drug trade and the severing of relations by a number of large overseas corresponding banks with Guyana and the region.
Both the Governor, who oversees the operations of commercial banks in Guyana, and Finance Minister, Winston Jordan, on Tuesday assured that there is enough foreign currency in the system to satisfy demands and there is no immediate evidence of a shortage.
Jordan warned local banks not to hoard their supply but make these available to customers.
Yesterday, as complaints continue from a number of persons of difficulties in acquiring at the banks, the Governor said that Central Bank is working with the financial institutions to ensure the situation remains under control.
As of yesterday, the local banking system needed an immediate injection of US$6M ($1.2B), the official disclosed. This is by no means a large amount, when taking in context the volumes.

Ganga insisted that there were no signs on Monday that the banks wanted Central Bank’s intervention.
As a matter of fact, he revealed, the banks had over US$10M floating in the system with just over US$8M in applications and commitments.
Following the story in Kaieteur News on Tuesday, local banks immediately applied to Central Bank for help.
Commercial banks asking for US dollars from Central Bank this week were told to submit evidence of the demands by customers.
Some of the applications by customers could not be substantiated as they were based on letters and emails. Applications for foreign remittances would normally be accompanied by backup documents like invoices, he said.
A market analysis yesterday found that Central Bank will have to release about US$6M.
One of the immediate measures that Government will be taking also is the Central Bank’s halting purchases of currencies from Trinidad and Tobago and Barbados.
There is evidence that persons and companies have been dumping the currencies here and buying up US.
Both countries are facing tough times and shortages of foreign currencies.
This is evidence from the fact that there is currently $38M in cash from Trinidad, four times of the 2014 figures.
In terms of Bajan dollars, this has moved from $8M to $13M in cash now.
Ganga was unable to confirm how that amount entered Guyana but said it came from both the banks and non-banks (cambios). The cash were sold to Central Bank.
According to the Governor, persons with TT and Bajan currencies who want to sell can still visit Central Bank once they can prove that the transactions are legitimate.
According to the Governor, commercial banks have committed to injecting some of its own reserves from overseas to help with supplies.
The situation with Trinidad is so bad that one customer there is unable to raise US$1M to pay the Guyana Sugar Corporation.
According to Ganga, there is evidence of different schemes to buy up foreign currencies here.
One is the opening of accounts by foreign companies- like from Suriname- depositing Guyana dollars and asking for US.
The official admitted that there will never be a comfortable situation where there is enough foreign dollars available- not anywhere in the world.
Ganga argued that it may be true that banks will also be looking out for its customers first than persons who just walk off the road asking for US dollars.
There have even been cases of persons using their credit cards to buy up foreign currency, it was disclosed yesterday.
According to Ganga, local banks have never been turned away when they come knocking for foreign currency at Central Bank.
Making a case of the economy being on solid grounds, the official pointed to strong revenues from gold. While Guyana has not done so well with sugar and rice, the country’s balance of payments has improved significantly from other sectors, including from things like fisheries and rum.
With a decline in the import costs for fuel, the Governor insisted that the economy was healthy and strong. It is doing better than other Caribbean countries like Suriname, Trinidad and Tobago and Jamaica. It is doing better than Barbados which has a fixed rate system but has also an informal trade being allowed.
According to the official, the foreign currency system in Guyana is “efficient”.

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