Shortage of foreign currency leads to

higher exchange rates – Cambios

With Guyana failing to submit a report by its Friday last deadline to the Caribbean Financial Action Task Force (CFATF), many of the local Cambios have expressed their concerns as to how the implications of that action will further affect their businesses and customers as well. Prior to failing the deadline, Guyana had landed itself on the CFATF’s regional blacklist as a result of missing initial deadlines. Since Guyana’s blacklisted status, Cambios and other financial institutions have being experiencing the effects of the Anti Money Laundering dilemma.

Shadow Minister of Finance, Carl Greenidge

Further, cambios such as A&N Sarjoo Cambio, L. Mohabeer & Son, Mohamed’s Enterprise, Sookraj Cambio and Swiss House Cambio have complained about the “sudden shortage of foreign currency.” A representative of L.Mohabeer & Son’s Cambio said, “There is a shortage of foreign currency. As a result of that, we are now selling the US dollar at $210. “The exchange rates fluctuate for different reasons but this is happening because of the Anti-money Laundering situation. Cambios are being made to feel the squeeze. Our customers with whom we conduct large transactions were cut by 50 percent. “And our biggest clients have eased as they now prefer to do wire transfers which are cheaper.” Another representative of Sookraj Cambio said that the cambio has been affected since its biggest customers are now turning to wire transfers. “With the shortage of foreign currency, we had no choice but to increase the rates. We had the US dollar selling at $205, now we had to increase to $210. If this continues, the rates will go up.” Nazar Mohamed of Mohamed’s Enterprise while agreeing with his counterparts, said, “There is a lot of uncertainty with regard to the implications that will follow now that we have missed the last deadline and with the shortage of foreign currency and coupled with losing customers to wire transfer system, there will be more effects on our own businesses. Prices will certainly increase.” While some cambio owners may firmly believe that the current shortage of foreign currency is directly linked to the anti money laundering situation, Financial Analyst, Ramon Gaskin, based on his research does not agree. Gaskin does not dispute that there is a shortage of foreign currency but he stressed that it is as a result of the foreign earners being unable to fulfill their role. “The exchange rates have gone up by seven percent since the beginning of the year. In addition, the currency is depreciating versus the US dollar. This means that you have to pay more Guyana dollars to get the foreign currency. “This also means that the cost of imports will go up; in short there will be ripple effects.  But the shortage of currency is because of the poor production of sugar and gold prices dropping.” He added, “It is also because of the failure of BOSAI and RUSAL to honour payment arrangements as it relates to the bauxite they extract. The fact that the bulk of our rice is being bartered with Venezuela is also a contributing factor. “Our foreigners exchange earners are not being able to get this done. The country is not earning as much as it should.” Also supporting Gaskin’s comments was A Partnership for National Unity’s Shadow Minister of Finance, Mr. Carl Greenidge. The former Minister of Finance asserted that while there is a shortage in the foreign currency, it is as a result of the fall in gold prices and not because the report on the Anti Money Laundering and Countering the Financing of Terrorism Bill was not submitted on February 28. “It has nothing to do with the AML Bill not being passed. When the bill is passed the government will be forced to implement it and that is when we will actually see problems. “Whatever hiccups we have now it is not because of anti money laundering.”