Bank of Guyana probe uncovering reasons for US notes shortage at cambios

FLASHBACK: Finance Minister, Winston Jordan and Governor of the Bank of Guyana, Dr. Gobind Ganga speaking on the balcony of Parliament Building.

A probe by the Bank of Guyana and other supervisory agencies into the shortage of United States (US) dollars at non-bank cambios has already raised some red flags, but Finance Minister Winston Jordan has declined to divulge details.

Jordan said so far the investigations have shown that at least two non-bank cambios “have really caused this problem”. “Our investigation is leading in a certain direction,” he said, adding that the findings of the probe could be made in another week. “We have a fair idea why there is a shortage of cash and that why is this coming from the commercial non-bank cambios,” said Jordan.

He singled out an unnamed cambio which first began selling US dollars at a rate of GYD$235.00 for US$1.00. More than two weeks ago, several city cambios had no US dollars to sell. But, Jordan sought to assure that Guyana’s foreign exchange reserves total US$530 million and almost US$500 million in the commercial banking system at the end of August, 2019 and so there was no reason for a shortage.

“The commercial banking system does have a lot of cash. There is absolutely no question about it and in fact, I haven’t heard as great an outcry in the commercial banking system as I am hearing at the commercial non-bank cambios,” he said.

The Finance Minister maintained that “nothing differently is happening at this time” compared to one or two months ago that could have resulted in the Guyana dollar plummeting in recent weeks. “All of the supervisory agencies in respect of cambios will be pooling their resources to go after this issue,” he said.

Jordan said there is a demand for the “big note”, suggesting it is for US$100 and US$50 bills because they are “easily transportable”.

More than one year ago, the value of the local currency had nosedived to GYD$250 for US$1.00, largely due to Trinidadians who had been coming here to purchase American dollars to cope with their own foreign currency shortages. At that time, too, the Finance Ministry and Bank of Guyana had observed that licensed gold exporters had not been injecting their foreign earning back into the local economy.

The Bank of Guyana had then instructed cambios to ensure there is a maximum GYD$3.00 difference between the buying and selling rates for foreign currency, mainly US dollars.

However, people who conduct foreign currency transactions have noted that US$100 and US$50 bills are bought and sold at rates higher than those being posted up at a number of cambios.

In February this year, the central bank Governor, Dr. Gobin Ganga, had to issue an assurance that there was no shortage of foreign currency to transact international business such as wire transfers, but there were fewer US notes circulating at cambios and commercial banks partly because the increasing number of foreign workers were buying up the bills.