The limited availability of foreign exchange has meant that individuals and business have had to turn to the black market for US dollars.
Several business owners told the Business Guardian that if US was required it could be purchased off market at between TT$7.50 to $8.50 for US$1.
This off market (black market) availability has lead to questions about the distribution of US into the local market.
It’s a concern that has long been in the mind of president of the Downtown Owners and Merchant’s Association Gregory Aboud, who once again questioned the policy and the role of the banks in distributing the foreign exchange allocation.
“We don’t see anything in the policies which are being used at this time that indicates that it is going to improve. Our concern is that businesses which rely on foreign exchange to be relevant to the market are going to become more and more pressured to survive by the scarcity of foreign exchange,” said Aboud, “We are concerned and have expressed concern before that. The policy is being used to manage a foreign exchange situation in our country are destined to create more distortion and hardship and to create a bigger and bigger parallel black market trade.”
The DOMA president said that he had been reluctant to speak more about these concerns as he was previously met with accusations that the business community had ulterior motives when these concerns were raised.
But the lack of readily available USD is having adverse affects, which will come to bear in time according to former Supermarket Association head Balliram Maharaj.
He told the Business Guardian that the reduced forex distribution has already affected the importation of food products, as he seen serious increases in imported cheese and milk. He said the forex situation, coupled with the increased limitations on importations as a result of the pandemic could put the country in a food crisis.
“I am definitely seeing food starting to dwindle away in March or in April down the road because of forex, because of the COVID effects on the demands of food,” said Maharaj in a phone interview.
The increased scarcity has also meant that local wholesalers and retailers have been unable to maintain large stocks whilst also seeing reduced imports.
Maharaj believes that further taxes should be placed on foreign food franchises in a bid to encourage more support of local franchises while also easing up the consumption of foreign exchange.
Maharaj clamoured for the finances that would be collected from that tax should be re-routed into the agriculture sector as a means to further reduce the import bill.
The DOMA president also suggested bolstering construction, a sector he argued which does not require forex investment.
“Construction of housing and construction of medium to low cost apartments and so on is falling by the wayside because that sector has not been given any stimulant which could take advantage of the downtime created by the world economy and by COVID and so on,” he said.
This he said could provide much needed jobs in this trying period while not affecting the foreign exchange reserves.
It is however well known that several of the inputs in construction, including steel has to be imported.
Obtaining foreign exchange has for some time become burdensome, with the past six years seeing increased limits on the distribution of US currency.
For the common man, this has mainly affected their online shopping and prior to the COVID-19 pandemic, the amount of funds they could access for trips abroad.
For businesses, big and small, it has affected their importation practices.
On Monday, Republic Bank became the latest bank to announce a reduction of US dollar limits on credit cards as they informed their spending limit would now move from $12,000 to $10,000 with effect from March 23.
This served as another blow to small business owners who had turned to the credits cards as a means to obtain their imported goods.
The adjustments in the limits has prompted business owners to adjust their approach.
One small business operator who imports to sell wholesale told the business Guardian his business had been affected by the limits as he has to order less goods at a time but with more frequency to maintain inventory for their clients.
This has made his shipping costs go up as well. Previously the wholesaler would have ordered a container full of items for business he is now forced to seek less than a container which also added costs for the business.
The reduction has also meant how products are ordered, or are made available have also changed.
“With most of my US limits on all credit cards reduced, I will place orders and suppliers would hold until I get enough US to process order, so when I do have sufficient funds some stock on order no longer available. So right now it’s difficult to supply the demand,” the wholesaler told the Business Guardian.
In some cases to work around the shortage, attempts have been made to make payments in other currencies such as Euros, Pounds and Canadian dollars to obtain these goods but often at an unusual cost as opposed to the traditional US transaction.
Another small business owner from Aranguez said he saw the pros and cons of the restrictions as the restrictions have made him do smarter business.
He told the Business Guardian that previously with wider availability he would experimented more with the items he purchased for his store but now he prioritises items which will be sold with greater certainty, leading to increased profits.
Another Aranguez retailer agreed.
You have to maximise whatever US you have you have to maximise the power of the little resources you have,” said the retailer.
This strategy has also been utilised by major distributors who have opted to use US currency to import pandemic hot sellers such as the Clorox as opposed to international cereals and snacks.
However former Energy Minister Kevin Ramnarine felt there was another factor which lead to the shortage.
In a social media post Ramnarine said, “The $US supply crunch in T&T is related to (1) the level of taxes and royalties paid by energy companies to the T&T Govt and (2) sales of USD by energy companies to commercial banks. In both cases levels are significantly down due to lower prices, production & activity levels.”