Governor of the Bank of Guyana Dr. Gobin Ganga has challenged claims by Cambio dealers that the introduction of a limit of $3 on the spread of the buying and selling rates for foreign currency has resulted in a decrease in business.
According to Ganga, figures recorded by the Central Bank show a significant increase in foreign exchange transactions over the last two months.
“In January, Bank Cambios purchased US$82.7 million in currency and sold US$ 95.1 million, while as of February 18 they had purchased US$158 million and sold US$164.6 million,” Ganga told a press conference at the Ministry of Finance yesterday.
He added that in the case of non-bank cambios, January purchases were $3.2 million, while sales were $2.4 million. Up to February 18, those same entities had purchased $5.6 million and sold $6.3 million.
Last month, the Bank of Guyana issued circulars to bank cambios, non-bank cambios and money transfer agencies informing them that they had to fix the spread between the buying and selling rates to no more than $3, in an apparent response to weeks of stress on the foreign currency market.
Cambio dealers told Stabroek News on Wednesday that they had seen a slight drop in business since the implementation of the spread.
One person even claimed that more
persons are being pushed towards the money changers on the streets as he pleaded with the officials at the Bank of Guyana to rescind its decision and to let the currency trading market flow on its own.
He argued that just like any other good, the price of currency depends on the supply and demand rule and emphasized that the supply and demand drastically affects the price at which currencies are bought and sold. He noted that whenever there is a surplus of currency and the demand is down, the cambios voluntarily drop their prices without any intervention from the Central Bank and, therefore, the traders should be able to freely control the flexibility of their spread.
Another explained that since the currency market in the country runs parallel with the international one, the money could drop any day, and because of the restrictions of the spread, they would lose money.
Both Minister of Finance Winston Jordan and Ganga, however, challenged these arguments.
“The exchange rate for Guyana is freely determined. It is a liberalized rate we have put in place a spread so that your maximum profit on each US is GY$3. We can’t have people buying at $199 and selling at $220, that’s gouging,” Jordan contended.
Ganga further noted that the average spread between the buying and selling rate in 2016 was $1.64, which is little more than half the $3 now being implemented.
“How can you say because of the spread you are unable to do the type of business you want? I’m not sure how it would’ve affected your business. In 2016, the non-bank spread was $1.64 and we have doubled that,” he said.
He also explained that the foreign exchange market is presently accommodating itself.
Addressing concerns about persons seeking currency being waitlisted, Ganga said that “you can’t expect to go into the bank today and get currency immediately. We are ensuring that we protect our foreign reserve for use by legitimate businesses in Guyana.”
