Torrential rains at midday resulted in flash flooding along Endeavour Road, Chaguanas today.
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Shippers paying more for US dollars
Businessmen say problems with the supply of US currency have not eased although the Central Bank injected US$200 million into the market last week. Two groups, the Shipping Association of T&T (SATT) and the Chaguanas Chamber of Industry and Commerce, told the T&T Guardian yesterday that their members continue to be frustrated in their efforts to secure adequate amounts of US currency for their business operations.
The Shipping Association said the situation is now at a chronic stage. “It is too early to assess the anticipated impact (of the injection), but SATT members continue to reel from the heightened level of administration required to deal with what they now consider to be a crisis,” the group said, adding that low supply is driving up the price of the US dollar. “One shipping agent has indicated that his company will now be using an exchange rate of TT$6.55 for transactions with consignees as this is the rate their bank is charging them to obtain the amount of US requested. Others have resorted to purchasing Canadian dollars then changing it to US dollars, effectively devaluing the TT dollar.”
SATT is calling for a review of the Central Bank’s new distribution protocol or a return to the former protocol. The Chaguanas Chamber wants local financial institutions to explain why there is an apparent shortage in supply of foreign currency and “why businessmen are continuing to be unable to access sufficient funding.” The Chamber said it is “disappointing that after queuing in line for more than an hour, businessmen are told that the transaction cannot be concluded due to the unavailability of foreign currency.” “Most businessmen have to opt for much lessor sums of money, invariably affecting their credit rating with suppliers in the US and as far as China,” the group said. “It is public knowledge that T&T has in excess of US $10 billion surplus inclusive of the HSF (Heritage Stabilisation Fund) which is sufficient for more than one year import cover, therefore the supply can meet the demand.”
The group quoted a statement by the International Monetary Fund indicating that the country’s external position remains healthy. “Increases in foreign exchange inflows may soon help to alleviate shortages, although some uncertainty about the availability of foreign exchange may be providing an incentive to hold larger than usual cash balances in foreign currency,” the Chamber said. The group said it looks forward to seeing the impact of a new system of allocating foreign exchange introduced on April 1. It is calling on the Central Bank to consider moving towards a more flexible, market-clearing system if “significant unanticipated shortfalls recur.” Central Bank Governor Jwala Rambarran, speaking at a Monetary Policy Forum in Tobago last week, said in the last two decades, demand for foreign exchange has increased and its composition changed to reflect new patterns of consumer spending.
He said last year the supply of foreign exchange almost tripled to $US5.8 billion and the Central Bank intervened with increased volumes of foreign exchange to quell excess demand pressures. Rambarran said In 1993 the Central Bank sold a $US33 million. This increased to almost $US500 million by 2003 and last year it sold $US1.7 billion to the banking system.
For the first five months of this year, the Central Bank sold US$610 million to the financial system.