Trinidadian businesses buying imports with Guyana’s foreign exchange

Last Updated on Thursday, 17 August 2023, 21:26 by Denis Chabrol

Vice President Bharrat Jagdeo on Thursday said Trinidad and Tobago businesses have found a solution to the prolonged foreign exchange shortage in their homeland by buying their imports through Guyana and shipping them to Port-of-Spain.

“We notice a trend here is that some Trinidadian companies are procuring large quantities of goods for their businesses in Guyana and in Trinidad and making payments from here to their suppliers, so they are utilising our foreign currency to make those payments,” he told a news conference.

He hinted that that might be one of the reasons for the selling rate of the US dollars being as much as GY$220 for US$1.00. “We have to examine those who are requesting the foreign currency at some point in time to see if there are unusual spikes from some people based on what we have observed- this payment of goods for another country,” he said.

Giving an overview of Guyana’s foreign exchange market this week, he said one commercial bank on Monday showed higher requests and the availability of forex and several banks had significantly more forex than their requests.

A possible solution, according to Mr Jagdeo, should be an interbank foreign exchange market rather than individual banks keeping their foreign exchange for their customers. “If the interbank market was working, those who had surplus would sell to those who have demand and then the aggregate market, the national market clears across the board but that doesn’t happen,” he said.

That results in multiple requests at different banks, he said.

At the same time, he said it was important to keep the exchange rate in that vicinity to prevent the Guyana dollar from strengthening against its US counterpart. He sought to assure that the Guyana government was on standby to put more foreign currency in the market if needed. ‘We are constantly watching this. We are watching the daily movement of balances and all of that and, if necessary, the government will intervene to smooth out the market,” said Mr Jagdeo, a former Finance Minister.

Several years ago, the Guyana government had said that Trinidad and Tobago nationals had been coming to Guyana to buy large sums of US dollars from cambios, resulting in a forex scarcity on the local market.