Trade Minister Vasant Bharath said yesterday that there is enough US currency in the system and distribution will become more efficient as a result of talks with the Central Bank this week."Based on conversations with the Central Bank this week, I believe what will be put in place and a closer management of the system will allow everyone who requires US dollars to pay foreign suppliers when they have access to it," he said.
"I do not agree that the lack of foreign exchange has caused discomfort or a situation where people believe there is a shortage and therefore when it is available they purchase more than they require. The situation with the foreign exchange has been a bug bear for the last few months. I believe we have found the formula that will ease the tensions in the market so that on a weekly basis there is enough foreign exchange."
Bharath, who spoke at a workshop held by the American Chamber of Commerce of T&T (AmChamTT) at the Radisson Hotel, Port-of-Spain, said there approximately US$3.5 billion in foreign currency in the country at present."So there is a significant amount of US dollars in the economy. Because of this, there will not arise a lack of confidence in the system," he said.He admitted that credit card transactions have been responsible for the increased demand use of US dollars.
The minister said credit card transactions account for more than US$500 million of foreign currency expenditure in the country.AmchamTT president Hugh Howard said the group met with Central Bank Governor Jwala Rambarran on Thursday to discuss the foreign exchange situation.
"The Central Bank Governor's position has been very clear, that the Central Bank does not dictate to the commercial banks to whom they should give foreign exchange. One of the assurances that the Governor gave was that the Central Bank will be injecting foreign exchange on a more frequent and proactive basis so that when people go to the banks there should not be that lapse between the time the Central Bank injects addition foreign exchange," he said.
Howard said the Governor also indicated that Central Bank injects about 25 percent of the foreign exchange that exists in the system."About 75 per cent of the foreign exchange is provided by the commercial banks, so proper dialogue is needed between the Central Bank, private sector and probably the Ministry of Finance," he said.
RBC economist Marla Dukharan, who also spoke at the workshop, was challenged by Bharath over her claim that US dollar deposits in the financial system have been declining over time."Compare this to TT dollar deposits, which have grown since 2011," she said.