Private sector hails swift response to foreign exchange market hiccups

The Private Sector Commission (PSC) has welcomed the government’s injection of US$100 million into the foreign exchange market, calling it a timely and proactive move.

Chairman of the PSC’s Finance and Economics Committee, Ramesh Dookhoo, said the intervention reflected strong government oversight.

The Ministry of Finance, in a statement this week, explained that the funds would be distributed across commercial banks to provide immediate relief and meet outstanding foreign currency requests.

While the financial system maintains adequate foreign exchange levels, the ministry noted that timing mismatches at some banks had caused delays in processing orders.

The latest injection follows a US$35 million disbursement last month aimed at addressing reported currency shortages in the banking sector.

Dookhoo told Ignite News that the interventions were “extremely positive” and were made even before there were any major requests from the business community.

“We are already seeing the positive effects of the injections and it’s a difficult place to be because the government has to monitor to ensure availability and stability,” he said. “On one hand the challenge is to ensure that there is enough US dollars in the system to pay bills promptly whilst on the other hand the challenge is to ensure that the exchange rate is stable,” the PSC executive added.

Vice President Bharrat Jagdeo, speaking at a weekly press briefing on Thursday, said the Central Bank continues to track foreign exchange movements closely.

“The Central Bank monitors this… and so we can’t see the same demand resurfacing but it’s a recurring thing… the economy has grown now to 20-something billion dollars up from a few hundred million dollars so the demand for currency is there,” he said.

He continued: “What you see is the data all the time where it’s not clearing but you don’t see the vast volumes of transactions that take place every day. Massive volumes of transactions take place. So when I see $100M surfacing it’s not a major deal because it’s on a market that runs into billions of dollars every day for legitimate purposes in a relatively big economy.”

Dr Jagdeo said the administration will continue to prudently manage the currency market.

“We don’t want that to happen… people say why don’t you allow the currency to come to 200 to 1 and stuff like that (but) it would kill certain sectors. It’s the same Dutch disease,” he said.