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Local foreign reserves at record high

Published: 
Tuesday, July 1, 2014
An overhead view of the T&T Pavilion.

T&T’s net foreign reserves have hit a record high, RBC Caribbean Group Economist Marla Dukharan said in her latest RBC Caribbean Economic Report. She cited online data from the Central Bank which showed that net foreign reserves reached US$10.36 billion in April—the highest level ever—which equates to just over 12 months of import cover. Commenting on the price of the TT dollar versus the US dollar Dukharan said: “On March 17, the TT dollar reached its weakest level ever relative to the US dollar, at TT$6.4686 to US$1, according to the CBTT. Then on June 16, the TT dollar appreciated to its strongest level relative to the US dollar since November 15, 2010, at TT$6.366 to US$1.”

 

She said this represented a TT dollar appreciation of 1.63 per cent against the US dollar, compared to the March 17 all time low. The figures have been released in the wake of foreign exchange distribution problems which resulted in many local distributors being unable to settle their debts to their overseas suppliers for several months. Finance Minister Larry Howai repeatedly denied there was a foreign exchange crisis. The problem was blamed on a change in the distribution system where 90 per cent of the available foreign exchange was auctioned to 12 foreign exchange dealers. That system has since been changed and Central Bank officials said there will be an easing of the problem.

 

Dukharan’s report, which also highlighted financial issues in the wider Caribbean, also dealt with the Eastern Caribbean Central Bank’s (ECCB’s) foreign reserves which have been rising steadily, and are projected to grow from an estimated US$1.17 billion in 2013 (or 4.5 months of import cover) to US$1.21 billion this year (4.6 months of import cover). The economist also reported on the June 27-28 visit to Jamaica by IMF managing director Christine Lagarde who announced that “the country has made some hard choices to get growth higher and debt lower.”
While Jamaica implemented difficult measures, it tried to spread the burden across society, the report quoted Lagarde as saying. While the government was cutting spending, it was doing its best to protect the most vulnerable—raising cash transfers for poor households by 67 per cent for the elderly and 15 per cent for others last year, with another 15 per cent increase planned for October. “Public finances are healthier and growth has returned,” Lagarde said. The RBC analyst quoted Lagarde as saying that “Jamaica has consistently met its targets under the IMF programme.”