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US$50m fails to ease forex woes

Published: 
Friday, May 16, 2014

An injection of US$50 million into the foreign exchange system late last week has failed to ease supply problems affecting the local business community. Officials of two business groups told the T&T Guardian yesterday their members are still unable to get sufficient amounts of US currency to pay their overseas suppliers. Vernon Persad, president of the Supermarket Association of T&T (SATT), said he complained to Prime Minister Kamla Persad-Bissessar about the problem when his group met with her earlier this week. “We brought to the attention of the Prime Minister what are the consequences we will be facing from an international perspective from our suppliers. 

 

“We are saying that we have problems at the bank to get a steady supply of foreign currency to pay our bills.  “On the other side, our suppliers are reading in all the major international publications that T&T has a very good credit rating and we have sufficient foreign exchange reserves for sufficient import cover and yet the two are not jelling,” he said Persad called for priority to be given to the food sector for the supply of US currency. In a statement yesterday, the T&T Chamber of Industry and Commerce CEO Catherine Kumar said: “Some of our businesses are experiencing severe difficulties with respect to meeting their foreign exchange needs to pay suppliers for imported goods, which can have a detrimental impact on their operations and viability of their businesses.

 

“Our members have also expressed some concern with the new arrangement for allocation to the authorised dealers. The private sector is now being advised to ‘shop around’ for foreign exchange, but this is not an efficient way for them to conduct their business. And even when this is done, their requirements are not being met. Additionally, the business purchaser ends up paying a higher rate for their US dollars.” Kumar said the Chamber will host a meeting on June 6 with members of the business community, the Bankers Association of T&T and Central Bank Governor Jwala Rambarran to find appropriate solutions to the problem. Last Friday, the Central Bank sold US$50 million to foreign exchange dealers to deal with what it said was “a seasonal decline of currency inflows as well as to alleviate trade-related demand pressures in the economy.” This took the bank’s total supply of foreign exchange to the financial system for the year so far to US$410 million. The Central Bank said the domestic foreign exchange market was relatively liquid in the first four months of the year. Authorised dealers purchased US$1,884 million mainly from the energy sector and sold US$2,077 million to the general public.