(Trinidad Express) – Mounting demand for United States dollars has caused a foreign currency shortage in the local financial system.
Businesspeople across Trinidad and Tobago have been struggling to access US dollars and some are now worried that they may not be able to restock their shelves because they can’t pay for imported goods from North America and Asia.
The Central Bank has had to intervene and pump hundreds of millions of dollars to meet the demand for “greenbacks” from the local business community and individual consumers.
Scotiabank’s managing director Richard Young has confirmed the shortage of currency.
He attributed the increased demand for US dollars to “some capital movements”, whereby customers and investors were extracting US currency from the local system in the past months.
In an interview with the Express at the bank’s Port of Spain headquarters on Thursday, he suggested that a number of people were attempting to take advantage of the global meltdown and particularly, how it affected property prices in the United States.
“People may want to take advantage of properties abroad,” he said.
The Central Bank has injected US dollars into the financial system five times between January and February to satisfy the demand for bills.
In total, the Bank has pumped in US$280 million in the past two months to satisfy the need for US cash, Scotiabank data indicated last week.
There was also speculation by Young that multinational energy producers operating in Trinidad and Tobago had been contributing reduced energy taxes to the State because of plummeting crude oil prices which had resulted in fewer US dollars getting into the financial system.
A financial source told the Express on Friday that one commercial bank had a queue of business customers that needed as much as US$40 million last week and could not get the cash.
Energy companies have slowed production and this may have impacted on Government’s tax intake, he suggested.
Benchmark crude for April delivery fell US$0.80 to settle at US$44.44 a barrel on Sunday while natural gas prices slid US$0.13 to US$4.20 per 1,000 cubic feet.
Port of Spain businessmen have complained that their trade is being affected by the US dollar cash crunch.
Gregory Aboud, president of the Downtown Owners and Merchants Association, said in a phone interview: “We, like all others, are experiencing the current tightness in supply of US dollars. It is somewhat confusing given that in the first quarter, imports are significantly reduced and foreign exchange supply is usually enhanced by the 40,000 to 50,000 visitors for Carnival.”
He did not want to sound too many alarms but said it would not hurt if the businessmen had more market information from the Central Bank.
“There is no doubt we might be prone to blaming capital flight and for that reason, the solid hand of the Central Bank should be placed on the ‘national shoulder’ in an effort to strengthen confidence and reassure the market,” Aboud said.
A San Fernando-based electronics retailer told the Express on Saturday that he also had trouble getting US cash.
The businessman, who did not want to be identified, said he approached his bank for US$100,000 and was not able to get it.
He said he received a small amount but it was not enough to pay his foreign suppliers and he was worried that he would not get funds to settle his deliveries to Trinidad next week.
Energy Minister Conrad Enill dismissed the idea that government’s revenues from energy companies had contributed to difficulties experienced by businesspeople to get US funds.
“We have had this happen before and the Central bank intervenes and sells foreign exchange,” he told the Express in a phone interview.
He recalled that the country had ten months of US-dollar import cover and that natural gas prices were still stable and high to meet Government’s national budget.
Enill suggested that some customers might have been calling in favours at financial institutions to keep US dollars for them.
US dollars have continued to trade between TT$6.25 to TT$6.31 for one US dollar in the past weeks as demand and supply hovered.