Between the period January 1, 2017 and March 28, 2017, commercial banks requested $51,183,000 in US dollars from the Bank of Guyana (BoG), compared with $60,950,000 that was requested for the entirety of 2016.
This is according to data from the BoG and some in the private sector are claiming that the scale of the requests, which is equivalent to over 80% of the requests made for all of last year, is a representation of decreasing supply from other sources.
It is unclear whether there were similarly high requests in the first quarter of last year. Of the $60,950,000 in requests for last year, $27,650,000 was met, according to the data. Of the $51,183,000 in requests for the first three months of this year, $4,783,000 was met, it also showed.
Head of the Private Sector Commission Eddie Boyer told Stabroek News yesterday that Central Bank is one of several sources from which commercial banks get foreign exchange. The main source is generally export receipts. However, as the country’s export earnings decrease, there is increased demand of Central Bank.
“Export receipts go into the commercial banks but when they have a deficit of those they make a request of the Central Bank. The demand is showing an increase because we are not exporting enough. Everything is down but gold. We need to generate more foreign exchange; that is what we should be focusing on,” Boyer explained.
Stabroek News reported last week that some commercial banks in the city are still finding it difficult to meet even modest requests by customers seeking to buy US dollars and of six banks that were visited by this newspaper yesterday, only two had US currency for sale.
Finance Minister Winston Jordan recently said that with export earnings down from most of the country’s financial sectors, the supply of foreign currency has decreased. He said too that banks have suggested that there are more demanders in the market and that some gold dealers are hoarding. “Some have foreign retention accounts and are not supplying the market from them,” Jordan explained, even as he acknowledged that there is “some mismatch between supply and demand at the level of certain banks.”
He did not name the “new demanders’ within the market or state how much was being “hoarded.”
He also noted that the exchange rate for the US dollar had remained a constant $210 due to the collective action of the commercial banks until a spike late last year. He explained that this spike has resolved into a continuous increase in the rate due to the competitiveness of the banks, who have been offering different buying rates. He expressed the hope that the banks could collectively trust each other to fix the rate rather than attempting to break that agreement. “They have met before and tried to settle the rate before but since December they have been working individually and the tacit agreement that it remain $210 has suffered. We are asking for banks to trust each other so they’ll all hold one head,” Jordan said.