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Govt exploring greater forex control
Finance Minister Colm Imbert says that given the persistent tightness in the foreign exchange market, the government is considering exercising tighter control over the distrubution of foreign exchange.
Speaking on the Morning Brew television show on CNC3 yesterday Imbert said: "We (the government) are looking at whether we should get involved in a greater level of control of the foreign exchange distribution system. I'm trending towards more control of it rather than less to make sure that people who need it actually get it"
Probed about the way foreign exchange was currently being distributed, the Finance Minister stated that the abandonment of exchange controls in the early nineties meant that more discretion was given to commercial banks in terms of how they dispensed foreign exchange to their customers.
"We now have what is called an Honour System so the banks are supposed to give preference to trade and manufacturing."
Questioned about whether the bank were in fact doing this the Finance Minister replied: "No they are not"
"They (the banks) are obviously giving forex to their largest clients which only makes sense because if you're a bank and you want to make profits and you have an instrument available to you which is foreign exchange you're going to make available to the person who gives you the most income." Imbert said.
The minister said that one could not just "jump in" to the forex market without due consideration for the prevailing circumstances facing both banks and their clients.
"You can't just jump in and interfere because what you will be doing is reintroducing exchange controls, but there is a very strong argument for reintroducing some form of exchange controls by more tightly defining the instructions that are given to the banks"
"Right now the instructions are very broad. We can increase the list of items that they should give preference to and we can make the definition tighter" the Finance minister said