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T&T Chamber president: Give new forex system time to work
President of the T&T Chamber of Industry and Commerce Moonilal Lalchan is of the view the new system of allocating foreign exchange introduced by the Central Bank earlier this year must be given time to work. Lalchan made the comment ahead of tomorrow’s breakfast meeting hosted by the Chamber at which the Bankers’ Association of T&T (BATT) president Larry Nath, Central Bank Governor Jwala Rambarran and other stakeholders will discuss issues affecting the foreign exchange system.
Under the new foreign exchange allocation system, instead of 50 per cent of the total amount of US dollars from the Central Bank being auctioned among commercial banks, 90 per cent of US dollars are being auctioned among 12 licensed foreign exchange dealers. However, business people have been complaining about problems with the supply of US currency on the local market.
The Central Bank last week injected US$200 million into the foreign exchange system but this has not fully alleviated the problem. Yesterday, in an interview with the T&T Guardian, Lalchan said: “What has happened in the last couple weeks is that they have reviewed it and I know they have made some adjustments. It is all about finding out what is working and what is not working, then making the necessary changes.
“This came about because there was an outcry about the allocation and whether or not it was transparent. I would suggest we continue to monitor it. The Central Bank I believe is doing the right thing in trying to get to the bottom of it.” Lalchan said transactions done by individuals using US dollars are also driving up demand.
“The amount of shopping that is being done online, once you buy things with credit cards out there the bank has to settle that in foreign exchange and that is eating up a substantial amount of foreign exchange. Not necessarily does someone have to buy foreign exchange over the counter to pay for goods and services. That settlement takes priority over businesses because you have to settle bank to bank.”
Nath agreed there was need to give the system a chance to work. He reiterated that there is no shortage of US currency since “from a macro perspective our reserves are very robust, there is approximately 12 months of cover”. “BATT has had meetings with the Central Bank. The Central Bank has taken some of our suggestions on board and amendments have been made. We are following to see the impact on the distribution and on the market,” he said.
Nath said “kinks” in the new system may be addressed with the recommendations BATT made to the Central Bank. The Central Bank is expected to make another injection of US dollars into the system this week. The theme of tomorrow’s breakfast meeting Trinidad and Tobago Foreign Exchange Policy and the Implications for Business and Economic Growth. It takes place at the Leon Agostini Conference Hall, Chamber Building, Westmoorings from 8 am to 10.30 am.
During the meeting, Rambarran and Nath will give information on the Central Bank’s policy and its role in supplying foreign exchange to commercial banks, as well as the ways in which the flow of foreign exchange from banks to business can be improved.