Guyana Govt to move against businesses hoarding foreign currency – Jordan
Finance Minister Winston Jordan has warned of attempts to lower the value of domestic currency by exporters, who he said, are hoarding foreign currency. According to Jordan, these practices have the potential to destabilise Guyana’s economy.
Minister Jordan, who made these remarks during the commissioning of the new Citizen’s Bank headquarters last Friday, said some exporters have been withholding sales of foreign currency from the system. He noted the possibility that this was being done to provoke depreciation in domestic currency.
Jordan also noted that some exporters and importers are conducting mutual foreign exchange transactions, outside of the exchange market structure.
“Some companies have been seeking to pay for export and repatriate profits earlier than required in the business cycle, thus creating a demand for foreign currency. Aggravating this untenable situation is the action of some net foreign exchange earners, who are demanding foreign currency from the market, while hoarding their foreign currency holdings,” the Minister stated.
“Some companies are even purchasing foreign exchange to facilitate trade for their counterparts outside of Guyana, while a few exporters and importers are conducting foreign exchange transactions bilaterally, outside of the foreign exchange market.”
Jordan went on to assure the public that foreign exchange demands can currently be met with what is in the system. He was adamant that this was the case, despite the reduction in export earnings from sugar, rice and timber.
According to the Minister, the foreign reserves of commercial banks totalled US$315 million at the end of 2016. This is roughly the same level as in 2015. Jordan noted that in 2016, the Bank of Guyana had sold approximately US$30 million to commercial banks to smooth out spikes during seasonal demand.
“Indeed, for the period November to December 2016, the Central Bank sold some US$12 million to the bank cambios to ensure adequate flows of foreign exchange to the market. The Bank of Guyana will continue its interventions in the market as warranted.”
Jordan also called on those involved in the practice; exporters, importers and cambios, to be responsible and heed the entreaties of the Government. He also had an ominous warning; failure to do so would result in the Government taking decisive action.
Recently, there have been reports that there is a shortage of foreign currency in Guyana. The report had cited complaints from those in the business sector. This, however, has consistently been denied by Jordan and Central Bank Governor Gobind Ganga. (Guyana Times)