After a three-week trial which gripped the attention of the media and attracted widespread attention among the Turks and Caicos islands population, Cortez Simmons, the son and employee of Carl Simm
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Businessmen call for quick action - US dollar in short supply
Business owners are grappling with a shortage of foreign exchange, mainly US currency, at the height of the Carnival season. This has been confirmed by president of the Downtown Owners and Merchants and Association (Doma) Gregory Aboud who described the shortage as “pervasive and widespread.” He said the situation is affecting the reputation of several businesses and causing gaps in the supply of commodities.
“Suppliers are becoming doubtful about the ability of the individual’s business and that is very negative for the businesses in question,” Aboud told the Sunday Guardian.
Businessman Inshan Ishmael complained in an e-mail that his bankers turned down his request for US$2,000 to manage his roll-on roll-off business. Ishmael asked who was benefiting from the millions of dollars in foreign exchange and where was it going.
“This type of shortage seems to come and go in waves. It has been ongoing for years. It preceded this Government’s term in office and we believe something is intrinsically wrong with the mechanisms that exist in the country,” Aboud said.
He blamed the problem on the buying and selling rates of foreign exchange and the Government’s increased spending, saying a lot of state companies are devouring hundreds of millions of dollars a year.
“Their appetite for foreign exchange is very difficult to satisfy.”
Aboud: Questions about hoarding
Aboud said a major concern is the spread between buying and selling rates in commercial banks.
“Questions are also being asked about hoarding and artifical shortages,” he said, adding that a lot of the foreign exchange is being traded outside of the banking sector.
Aboud said although the situation was brought to the attention of Finance Minister Larry Howai and Central Bank Governor Jwala Rambarran at a business stakeholders meeting a week ago, the situation continues to affect local business operations. He said banks have been asking customers, to come back in ten days or two weeks’ time.
“Where commitments have been made and obligations cannot be satisfied it is causing a great amount of distress. Foreign suppliers don’t understand when we tell them we are waiting on foreign exchange. In their minds it’s either we can pay our bills or can’t pay.
“The situation has the potential to become one of great concern if the authorities and the banking sector continue to deny that we are having an excruciatingly short supply of foreign exchange in a country.”
Aboud said the net effect of a shortage of any commodity is increased concern by those who need its use.
“So because this situation has evolved into a shortage, people are actually buying more than they need at this time, which is adding to the intensity of the trouble we are facing.”
Central Bank monitoring situation
The Central Bank said in a statement on Friday that they are aware of the difficulty and are working aggressively to address the situation.
“The bank continues to monitor developments in the foreign exchange market and will take appropriate action as needed,” the release stated.
In the last three and a half months, the Central Bank has sold US$500,000,000 to the banking sector to alleviate tensions in the domestic foreign exchange market. It typically supplies 25 per cent of the total foreign exchange needs of the market, with the remaining 75 per cent supplied by the banking system.
The Central Bank said other initiatives are being pursued to strengthen the operational efficiency of the domestic foreign exchange market.
Howai not aware of problem
However, Howai in response to e-mailed questions, said he was not aware of a problem.
“Our foreign exchange reserves are high amounting to close to US$10 billion. In addition, banks have over $3 billion in US-dollar deposits and our Heritage and Stabilisation Fund is over US$5 billion,” he told the Sunday Guardian.
The Finance Minister said if there was a problem, “the issue may be the timing of the releases by the Central Bank and the conversions by other companies which earn foreign exchange.”
He said tourists coming in for Carnival convert their money into TT dollars which will assist with foreign exchange.
“Our problem is that too few local businesses earn and convert foreign exchange and therefore there is a heavy reliance on the Central Bank,” he explained.
Messages left for president of the Banking Association of T&T Larry Nath went unanswered.