US$ rate is $230 -manufacturers
-urge gov’t, central bank to intervene in market.
With complaints from businessmen mounting, the Guyana Manufacturing and Services Association (GMSA) yesterday said that the effective rate for the US$ is now $230 and warning that this would have severe repercussions for the economy it called on the government and the central bank to intervene in the market.
In a hard-hitting statement yesterday, GMSA said its board recently deliberated 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 $230.00 for the replacement of imported inputs into the sectors.
“We are concerned that our ability to keep prices stable will be limited and guided by this new rate. The burden of the changes in the VAT regime will also cause production costs to move upwards. The GMSA is encouraging all of the sectors to implement cost cutting exercises and have noted that some entities have started to rationalize employment.
“The rise in the price of the U.S. dollar will have far reaching effects on our country as a whole both socially and economically.
“We call on the Minister of Finance to hold broad consultations on this matter, urgently.
“We urge the Bank of Guyana and the Government of Guyana to take steps to stabilize the value of the Guyana Dollar immediately by injecting funds into the system as we believe that the rate is being driven by the simple Economic formula of supply and demand.
“This situation has the potential to further increase unemployment and at worst wipe out Companies”, the GMSA said.
Rates for the US$ of $230 and above have been quoted in recent weeks by businessmen and this represents a significant decline from the $208 to $214 range that had been experienced for a number of years.
The government and the central bank have for months played down concerns over the rate for the US$ and its availability in the banking system.
Contacted yesterday, the Bank of Guyana (BoG) expressed concern over local commercial banks charging exchange rates up of to $230 to US$1 for international transactions, including retail shopping.
“We are very concerned because what some of them do is charge premium rates for credit card use and what they saying [is] that rate it is not their official rate or what they are selling at… but even that is too high,” Bank of Guyana Governor Gobind Ganga told Stabroek News yesterday.
“We will be looking at it more carefully with them… that $230 is too high for people and this is really telling people don’t shop online,” he added, saying that he was informed about the high rates yesterday. Ganga said that as at Tuesday, checks by BoG revealed that the exchange rate did not move above $220 to US$1.
Ganga held his initial position; that there was no shortage of US currency per se and that persons just have to be patient to get the amounts they needed. “There is not a shortage and what I have been saying from the beginning is that you won’t get all you need at one time… You just have to be a little patient,” he asserted.
He said that the cost charged for purchases using debit and credit cards especially will be investigated by the BoG.
This newspaper tried contacting Finance Minister Winston Jordan yesterday but calls were not immediately returned.
The Bank of Guyana had, in January of this year, implemented a limit of $3 on the spread of the buying and selling rates for foreign currency.
But businesspersons and citizens had been complaining that their applications for foreign currency were being met with delays and they were being placed on waiting lists. Concerns were mounting that the distensions in the market might have signalled a lack of confidence in the economy, and led to incidents of capital flight.
Observers have also criticized the move saying that they felt it constituted the biggest rollback in the free trade of foreign exchange in decades.
Stabroek News visited some of the city banks yesterday and while buying and selling the of US dollar at the counter transactions varied in range from $210-$214 buying and $214-216 selling, purchases online and wire and other transactions saw a jump from $217.90 to $230 per US $1.
Republic Bank promised to get back to this newspaper to explain the reason for its price variations.
At non-bank cambios, it was pointed out that once a valid identification and explanation for why the currency was needed was had, a person could purchase starting from $215 and ending at $220, depending on the amount being purchased. The higher the amount being bought the lower the US currency was sold.
President of the Georgetown Chamber Commerce and Industry Vishnu Doerga said that his organization was in the process of analyzing information it had compiled from city banks and will comment definitively soon. “We are seeing differing rates from different banks and we are to get more clarity. When we started enquiring why the rates varied we got different answers… So we want to take a complete look at the information…,” Doerga said.
Some businesses are also bemoaning the fact that Muneshwers Shipping now wants payments in US currency because of limited availability of US dollars. “With regard to the limited availability of United States currency, Muneshwers Shipping is unable to make payments to the Maersk/Sealand shipping line.
We would like to implore you our valued customer to make payments due to us in United States dollars on all invoices for freight, demurrage and detention,” the company said in correspondence to customers.
The shipper also pointed out that a one per cent handling fee was charged for US dollar cash payments made to the specified bank.
Also, US dollar cheques and draft payments are subject to a handling fee charged by the bank and is determined by the value of the said payment method.
But the BoG Governor said that shippers need not resort to this.
“These companies … are net exporters, meaning that they receive US dollars for services they provide to the ship. So when the ship comes to their ports they receive US dollars”, Ganga stressed.
