There has been a growing debate and focused attention in recent years over the operations of banks and cambios with respect to the exchange rates for foreign currency.
There is some attention now, too, on how two of the country’s biggest money transfer services are conducting their business. However, Central Bank says it may not necessarily be that Western Union and MoneyGram are exploiting the situation.
The two money transfers came under the spotlight this week after Tony Vieira, a commentator, raised questions about the rates.
In a Letter to the Editor, Vieira said that he found out that Western Union exchanged US dollars for Guyana dollars at the rate of $202.1675 to 1 US dollar, but at a commercial bank he got $210.
He questioned whether it was okay that Western Union (WU) and MoneyGram (MG) offer a lesser exchange rate than that “authorized by our Cambio system and commercial banks? Don’t we [BOG- Bank of Guyana] regulate them at all? I believe that we established some time ago that as much as 300 million US dollars is being sent to Guyanese from the US, Canada and the UK annually to relatives here, in which case if the exchange rate of G$210 is used that amounts to 63 billion Guyana dollars, but WU is paying 202.1675 to 1 US$, which means that they are fleecing the poor Guyanese people who are being supported by their relatives abroad to the tune of 2.35 billion dollars [63 billion- 60.65 billion]”.
He also pointed to the huge spread between the exchange rate for other entities which is between $201 and $214. This contrasts with the spread at the banks which is $210 and $216.
According to Vieira, it is a fact that both Western Union and MoneyGram have to be licensed to operate here, which makes them accountable.
“WU and MG should be allowed their service fees since they are entitled to it, but they should not be allowed to manipulate the exchange rate in this manner…”
Contacted yesterday, Governor of Bank of Guyana, Dr. Gobind Ganga, said that both entities had been called in sometime back, as part of the regulator’s routine business.
From what was found, it may not necessarily be that the money transfer entities are involved in underhand business. Rather, it has been found that the rates are fixed by the head offices, that are not in Guyana.
The agents here are paid a percentage.
According to the Governor, in light of the increase in monitoring as a result of tougher anti-money laundering regulations, there is increasing risks.
There are more persons needed for monitoring and these come with costs.
“So it may not necessarily mean that they are manipulating the rates.”
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