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San Fernando Business Association (SBA) president Daphne Bartlett has welcomed Central Bank’s US $100m injection into the foreign exchange market but wants the authorities to pay close attention to where the foreign currency is going.
In announcing its latest intervention on Wednesday, the Central Bank, said it was intended to relieve pressure in the domestic foreign exchange system.
It was not the first intervention by the Central Bank, in the first six months of the bank the bank sold US$690 million to the financial system. Bartlett since the latest Central Bank injection some SBA members are already seeing improvement in the availability of US currency.
“We are hoping that this will really fill the void and things will be back to the normal,” she said.
Bartlett said the SBA will be monitoring the foreign exchange situation over the next month and will comment further.
UWI lecturer Prakash Ramlakhan said the Central Bank’s intervention demonstrated that the bank is being proactive.
“It will certainly assist the forex market in providing US, especially for the travel season.
“It will also bring a lot more confidence to the market,” he said.
“What one has to bear in mind is that this country has substantial foreign currency reserves so this is in no way going to affect our stock of foreign currency.”
He added that the intervention will not affect the trading range for the US dollar which will continue to he within its $6 to $7 range.
Ramlakhan said he would not be surprised if later this month or next month the Central Bank has intervene again.
“The Central Bank intervention is only to plug the gap between the supply and demand from the bank’s regular customers, individuals and corporations,” he expained, adding that the intervention is all about “maintaining confidence and ensuring the rate stays within a range and stability of the economic system.”
He said the timing of the intervention will be especially helpful for business people.
“We are now in the second half of the year so merchants will be looking at their Christmas stocks.
“They will start looking for foreign currency to make the initial downpayment as the case may be,” he said.