Consumers forced to pay high rates for foreign currencies

…as frustration grows over bank, cambio shortages

…Govt maintains scarcity contrived

Both Finance Minister Winston Jordan and Governor of the Central Bank of Guyana, Dr. Gobind Ganga, are maintaining that there is no shortage of foreign currencies in Guyana.

Dr. Ganga has said that despite stern warnings from authorities, businesses are suspected to be hoarding foreign currencies, and commercial banks and cambios are claiming shortages in order to cause customers to resort to paying exorbitant rates for foreign currencies, even purchasing elsewhere in light of the contrived scarcity.

And Finance Minister Winston Jordan recently announced on a radio programme 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 on the radio programme.

Usually, when commercial banks experience a shortage, they turn to the Bank of Guyana to purchase the currency to meet the demands.

Jordan recently announced that the foreign exchange reserves at the Bank of Guyana are 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; and based on the findings of investigations by this media house, 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, although the rate currently hovers at G$210.

HOARDING

During the mentioned radio programme, the Finance Minister said he believes there is a deliberate attempt to starve the economy of foreign currencies.

Junior Finance Minister Jaipaul Sharma has also opined that commercial banks and cambios are hoarding foreign currencies in order to get better prices from preferred markets.

He told the Guyana Times newspaper on Saturday: “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.

QUESTIONS

Questions are now being raised about why commercial banks and cambios are turning away local customers interesting in purchasing US currency, and why the banks and cambios are not informing the Central Bank if they claim a shortage exists.

Sharma explained that the only way Government can launch an investigation is if commercial banks visit the Central Bank with the supportive documents to prove they are experiencing a shortage but are being denied opportunity to purchase foreign currencies.

The Junior Finance Minister emphasised that no commercial bank has visited the Central Bank claiming a shortage.

WARNING

Government had signalled its intention to move sternly against businesses hoarding foreign currencies, because such a practice has the potential to destabalise the economy.

Jordan contemplates the possibility that hoarding is being practised in order to create depreciation in domestic currency.

He also noted that some exporters and importers are conducting mutual foreign exchange transactions outside of the exchange market structure.