asj posted:

$230 to US$1 – Exchange rate for US dollar hits all-time high

Mar 23, 2017 News 0 Comments

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  Central Bank Governor, Dr. Gobind Ganga

  Something noteworthy is happening in the local foreign currency trade, with rates hitting up to $230 in one city bank this week.
  The matter has raised alarm bells for the Guyana Manufacturing and Services Association (GMSA), with Central Bank yesterday saying that it will investigate.
  According to the GMSA yesterday, the matter was raised at a recently-held meeting of its Board of Directors, who deliberated deeply on the “woes” of the manufacturing sector.
  “The board is disappointed at the rate of deterioration of the Guyana dollar and has estimated that the real exchange rate, when available, being used for the purchase of foreign exchange is $230.00, for the replacement of imported inputs into the sectors.”
  And indeed, it appeared that at least one bank was charging that much.
  Yesterday, Kaieteur News’ Accounts Department reported that it was told by the Foreign Trade department of Republic Bank, Water Street, that the selling rate for US for wiring large amounts was $230.  However, that would be in stark contrast to the rates being advertised by commercial banks yesterday.
  Trinidadian-owned Republic Bank’s online selling rates were for electronic transfers- $210 with buying at $208.50 for US$1. Notes were being sold for $210 while purchases were at $207.
  The website of the privately-run Guyana Bank for Trade and Industry (GBTI) seemed a little way off as it was buying notes for $200 and selling for $210. Under Central Bank regulations, the spread is not supposed to be more than $3. For others (drafts and transfers) the rates at GBTI were $210 while purchases were $204.
  Contacted yesterday, Governor of Central Bank, Dr. Gobind Ganga, expressed surprise at the development, as his information differed from the findings presented by Kaieteur News. He said that indeed that he had heard of a $230 rate but these, he was told, were only for credit cards. The official pointed out that credit cards have higher charges and feeds.
  According to his figures, the average weighted purchased of US by commercial banks was around $215, while sale of the US dollar was hovering just over $219.
  As of this week, commercial banks reportedly had over US$13.3M between them, with commitments up to US$10M.
  “That means, according to the information submitted by the commercial banks, we have around US$3M available to be sold. We will be checking,” Dr. Ganga assured.
  According to the GMSA, it is concerned over its members’ ability to keep prices stable. This will be exacerbated by the climbing rates.
  “The burden of the changes in the VAT regime will also cause production costs to move upwards. The GMSA is encouraging all of the sectors to implement cost cutting exercises, and has noted that some entities have started to rationalize employment,” the body warned.
  “The rise in the price of the U.S. dollar will have far reaching effects on our country as a whole, both socially and economically. We call on the Minister of Finance to hold broad consultations on this matter, urgently.”
  GMSA also urged the Bank of Guyana and the Government of Guyana to take steps to stabilize the value of the Guyana dollar immediately, by injecting funds into the system “as we believe that the rate is being driven by the simple economic formula of supply and demand”.
  “This situation has the potential to further increase unemployment and at worst, wipe out companies,” GMSA stressed.
  The rates have been climbing in recent weeks with accusations that cambios were involved in a number of irregular transactions. It would be a difficult task to track this.
  In recent months, a number of things have happened in the economy. A clampdown on gold smuggling and anti-drugs smuggling efforts, especially with the presence of the US Drug Enforcement Agency, has reduced the amount of cash floating around.
  The fact that traders from Trinidad and Barbados have been buying up the US has not been helping the situation.
  Central Bank has halted its purchases of currencies from both countries to help boost the US dollar trade.
  A boon to the economy has been the number of US dollars coming from Cuban traders who have taken advantage of the no-visa policy of Guyana for nationals of that Spanish-speaking country.
  Suriname also has reportedly been snapping up a significant amount of foreign currency too from Guyana, with a number of companies opened here.
  Central Bank has also been reporting that some large transfers were not legitimate.
  Under regulations, banks have been asking for invoices and other documents to ensure transactions and demands are legitimate.
  On top of this, a number of key sectors have failed to bring in precious foreign currency.
  Forestry exports reportedly fell over 30 percent last year with rice and sugar raking in less.
  The economy has been helped somewhat with the record-breaking gold production which reportedly brought in US$800M last year to the banks.

This is what concerns me more....

GMSA sounds wake-up call to Govt as Guyana dollar plummets

As concerns grow over the plummeting value of the Guyana dollar, the Guyana Manufacturing and Services Association (GMSA) is urging the relevant authorities to take immediate steps to stabilise the value of the local currency.
The GMSA is calling on Finance Minister Winston Jordan to urgently hold broad consultations on the matter and warned that failure to arrest the situation would result in devastating consequences.

At its recently-held Board meeting, GMSA members deliberated deeply on the woes of the manufacturing sector, including the deteriorating rate of the Guyana dollar and dire impacts it would have on business and employment, and ultimately the entire economy.
According to the Board in a public statement on Wednesday, it is estimated that the real exchange rate when available for the purchase of foreign exchange is $230 for the replacement of imported inputs into the sectors.
“We are concerned that our ability to keep prices stable will be limited and guided by this new rate. The burden of the changes in the VAT regime will also cause production costs to move upwards,” the business umbrella body noted.
As a result, the GMSA is encouraging all of the sectors to implement cost-cutting exercises and have noted that some entities have started to rationalise employment.
The body warned that the rise in the price of the US dollar would have far-reaching effects for Guyana as a whole, both socially and economically.
The GMSA said the Bank of Guyana as well as the Government should immediately inject funds into the system in order to stabilise the value of the local currency.
“We believe that the rate is being driven by the simple economic formula of supply and demand. This situation has the potential to further increase unemployment and at worst, wipe out companies,” the GMSA stated.
Consumers have been crying out about being forced to pay high rates for foreign currencies as a result of the commercial banks and cambios claiming to have a shortage.
Usually, when commercial banks experience a shortage, they turn to the Bank of Guyana to purchase the currency to meet the demand.
Jordan recently announced on a radio programme that the foreign exchange reserves at the Bank of Guyana were in excess of US$600 million, but commercial banks and cambios across the country continue to turn away customers, claiming a shortage of the US dollar. Based on the findings of this newspaper’s investigations, popular cambios are turning away regular patrons who are interested in purchasing foreign currencies. This has resulted in businesspersons and the average Guyanese being forced to buy foreign currencies at exploitative rates.
Around the city, money changers have already raised their rates for the US dollar to G$220.
But both Finance Minister Winston Jordan and Bank of Guyana Governor, Dr Gobind Ganga are maintaining that there is no shortage of foreign currencies in Guyana.
Jordan, on the radio programme, explained that the Central Bank has no record of shortages at commercial banks. “The Governor has assured me that he doesn’t know anything about that, because the banks haven’t approached him for foreign exchange,” Jordan stated.
The Finance Minister said he believed there was a deliberate attempt to starve the economy of foreign currencies.
Junior Finance Minister Jaipaul Sharma has also opined that commercial banks and cambios were hoarding foreign currencies in order to get better prices from preferred markets.
He told Guyana Times recently that “maybe they tell the customers ‘no’ so they could get a higher rate. Maybe they are keeping it for some friend or some special customer”.
Nonetheless, he does not believe the situation warrants a probe. According to the Junior Finance Minister, Government cannot control what the commercial banks and cambios tell their customers.

Ring De Alarm!!

This is what happens when there is no hard currency in the central bank.  The rates are much higher on the blackmarket, as that is the only place you can get US currency to buy.

Bibi Haniffa posted:

This is what happens when there is no hard currency in the central bank.  The rates are much higher on the blackmarket, as that is the only place you can get US currency to buy.

The denial goes on but it will crash in their faces.

They can try but they can't deny this.  This is a reality that hits straight in people's wallets.  We are talking bread and butter issues now.  How long do you think before the country declares bankruptcy?  Carl Greenidge is on track to go into the Guiness Book of World records.  Serving as Minister in a govt that bankrupted the same country twice in two different eras!!!

Bibi Haniffa posted:

They can try but they can't deny this.  This is a reality that hits straight in people's wallets.  We are talking bread and butter issues now.  How long do you think before the country declares bankruptcy?  Carl Greenidge is on track to go into the Guiness Book of World records.  Serving as Minister in a govt that bankrupted the same country twice in two different eras!!!

The Stabroek News have his dismal performance well recorded in their archives. It's gonna be dejavu all over again.

This is a concern for so many more Guyanese, means that with an already high taxation. it would mean that all import costs will raise proportionately. means that more burden will fall on the backs of the poor:

Will we see any mass demontrations? you guess is as good as mine.

BoG refutes claims of US$1/$230; urges businesses to use other banks for foreign exchange

Governor of the Bank of Guyana, Dr. Gobind Guyana

The Bank of Guyana (BoG) says it is concerned with a statement issued by the Guyana Manufacturing and Services Association (GMSA) titled “The Effects of the Rising cost of Foreign Exchange on the Manufacturing Sector.”

The GMSA yesterday (Wednesday, March 22, 2017), released a statement in which it noted that “the real exchange rate when available being used for the purchase of foreign exchange is $230.00 for the replacement of imported inputs into the sectors.”

The financial institution is refuting those claims noting that “the rate quoted by GMSA is not a uniform transaction rate; rather, it is the online rate charged by one of the largest commercial banks in Guyana for its credit and debit card transactions, which represent a very small share of the Cambio market transactions.”

The Bank said the Association is adding fuel to the “rising speculative and destabilising activities in the foreign exchange market,” all of which could be harmful to the economy.

According to information released by the financial institution, for the week ending March 14-17, 2017 the weighted average buying rate was G$214 while the weighted average selling rate was G$218.

The turnover for the week was US$40.0 million, the bank said, while total purchases and sales at the bank Cambios were US$19.6 million and US$20.4 million respectively.

The aggregate working balance at the bank Cambios was US$13.7 million at the end of business on the 17th March 2017, and one bank accounted for 32.8 % or US$4.5 million of the total working balance.

The Bank of Guyana statement noted that demand at the end of last week was US$8M, with two banks accounting for the bulk of the demand.

In this regard, it is advising businesses “not to depend solely on one bank, but to pursue other banks to meet their demands for foreign currency at a competitive rate.”

Additionally, the BoG noted that there has been hoarding of foreign exchange by exporters, as evidenced by the large foreign currency balances that are being held in their exporters’ retention accounts.

“Instead of using these balances to complete their transactions, they have been sourcing foreign currency in the market. This has added further pressure on the demand for foreign currency and reduced the supply to the market,” contributing to the instability and depreciation of the rate, the statement added.

Thr Bank of Guyana reiterated that there is sufficient foreign currency in the market to meet legitimate demand and calls for patience and co-operation from stakeholders to ensure that there is no undue speculation and further deterioration in the rate.

Looks like the PNC apologists, formerly known as the slop can carriers,  are refuting the reality of 230 to 1 US. Its deja vu, back in PNC version 1, we saw similar claims where the street rate was 2 to 3 times the "official" bank rate. In fact it became illegal to carry foreign currency, and lots of police got rich harassing Indians. 

Drugb posted:

Looks like the PNC apologists, formerly known as the slop can carriers,  are refuting the reality of 230 to 1 US. Its deja vu, back in PNC version 1, we saw similar claims where the street rate was 2 to 3 times the "official" bank rate. In fact it became illegal to carry foreign currency, and lots of police got rich harassing Indians. 

I heard it might go as high as 250:1. Let us all please pray for Guyana and her people.

Govt policies driving market into panic – Jagdeo

Foreign currency shortage

Guyana has been hit with a foreign currency crisis where supply is progressively shrinking and there is a growing demand to hoard because of the expectation that the rates will slide, according to former President Bharrat Jagdeo.
Jagdeo, during a press conference on Thursday, said Government’s lack of economic policies was to be blamed for driving the foreign currency market into panic.

“What is picking up is the demand to hold foreign currency because of the expectation that the rate is sliding. If not of transactional purposes, it is because of the expectations in people’s mind that the rate is going to slide and they want to hedge,” he reasoned.
The Guyana Manu-facturing and Services Association (GMSA) reported that the exchange rate stood at G$230 to US$1, but the Central Bank has refuted these reports.
The Opposition Leader, one of the People’s Progressive Party/Civic (PPP/C) leading point men on the economy, said Government’s anti-business policies and burdensome tax regimes were most likely the root causes for the high level of uncertainty, which ignited the hoarding of  foreign currency.
Jagdeo warned that the current state of affairs, if allowed to progress, would harm the future of all Guyanese as it would spark a major spike in prices of commodities with import content and “the little increases the Government boasted about” would be wiped out in real terms.
There will be increases in a wide range of goods, from household products like food and clothes to commercial items such as equipment and machinery.
“Someone who works at a pharmacy explained to me that the exchange rate moved by five per cent and the cost of (imported) drugs to drugstore went up to about five per cent; when you add the VAT, they would have to now charge people for drugs at least 20 per cent more than they were paying,” he explained.
The cost of local flights has already escalated as a result of the unstable foreign currency rate, which is compounded by the 14 per cent VAT.
Jagdeo highlighted that expensive domestic air travel went against President David Granger’s dream to connect the hinterland and the coastal regions.
“I can only urge the Government to drop the VAT on interior flights, but then I have been calling on them to drop the taxes on everything else, which is counterproductive to their own stated objectives and the calls are not falling on receptive ears,” Jagdeo stated.
Reports are that the Chief Executive Officer of the Roraima Group of Companies, Captain Gerry Gouveia has already instructed that tickets for his flights must be sold in US currency instead of Guyana dollars.
Jagdeo emphasised that Government, which he labelled as either unconcerned or incompetent, needed to shift its focus from burdening the citizens with taxes and start implementing policies which encourage production, especially in areas which generate foreign revenue like mining, forestry and agriculture.
Failure to do so, Jagdeo predicted, will result in an underground foreign currency market. In fact, he shared the view of Junior Finance Minister Jaipaul Sharma, that the black market was already in operation with cambios conducting underground deals by selling to preferred customers at rates above the market value.
“The cambios themselves will, maybe in some cases, post one rate on the receipt and people have been doing this already. So you are my preferred customer, you pay me G$225 or 230, but I will put G$215 on the receipt for the central bank purpose,” Jagdeo said, noting that this move would cause the Government to lose taxes.
Jagdeo also said he has received information that officials of Government’s “finance apparatus” have been going around to non-bank cambios, instructing them that the US dollar must not be sold for more than G$215.
“They are saying if you sell beyond G$215, it will affect your licence,” Jagdeo said.
One local cambio confirmed to Guyana Times that Government officials had indeed passed that order