Last updated on Wednesday, October 30, 2024 at 9:08 pm by Denis Chabrol

Although many non-bank exchanges are selling US dollars at a price of GY$219 per US$1.00, Guyanese are assured that there is sufficient foreign currency in the local market and that there are new rules governing foreign exchange trading.

“Most banks are comfortable, but when they have this money, they just give it away to make a profit, so we review it and make sure everyone gets their money,” an official said.

A senior official at a financial institution said the Bank of Guyana had ordered commercial banks not to sell US dollars for more than GY$216.25 or US$216.50 and that each individual was now entitled to a maximum of US$1,500 in cash. “You don’t want the exploitation of people who go and buy it there and you can’t go steady and buy it too and you have to go to your bank so that if you want to go abroad you get some cash at a very reasonable rate.” the source said.

The source also said that commercial banks were ordered not to accept global foreign exchange purchases worth several million Guyanese dollars, say, as a result of property sales. In addition, banks were instructed to pay small amounts for such transactions when there is excess foreign currency. There are signs that banks should sell foreign currency to importers of food and other vital supplies rather than investing abroad.

Vice President Bharrat Jagdeo said on Wednesday that “we are carefully monitoring the market” to prevent the Guyana dollar from strengthening too much and prevent the emergence of Dutch disease or its excessive weakening. He noted that over the years the rate has moved around 212 to 222 and drops when there is an injection of foreign currency into the forex market. Economists say the Dutch disease can be addressed by maintaining inflation and increasing productivity.

The Bank of Guyana recently released almost $100 million into the foreign exchange market and said the government was ready to inject more into the system. “Our reserves now will allow us to intervene at any time. We have enough reserves to do it, but it doesn’t have to be just if one person moves the system. It has to be when we evaluate that aggregate demand exceeds aggregate supply to the market,” he said.

The banking sector was also said to be keeping a close eye on a number of Trinidadian companies operating here and who may also be purchasing goods for their operations in Trinidad through Guyana’s foreign exchange market. Trinidad and Tobago is experiencing a serious shortage of foreign currency. Jagdeo said the total foreign exchange flow matches the total demand, but there were players in the market who were hoarding large amounts of foreign exchange. He said some of the demand was being driven by the upcoming Christmas season, imports of goods, capital works and economic expansion. “Yes we believe that it is speculative – and we believe that there is some of that with some Trinidadian companies that pay for their products directly from here because they have foreign exchange control, they do not have foreign exchange there – but outside of that we believe that Much of this is driven by the real demands here,” he said.

If there is an oversupply of foreign currency, he said, the Bank of Guyana would buy back from the market to ensure fairness.