I have written over ten columns on the foreign exchange (FX) market since 2009. These essays are direct in the sense that they address explicitly the question of what is determining the exchange rate and the quantity traded in the local market. In 2017, I wrote a six-part series to address some of the issues that have again been raised in the past two weeks. For example, I wrote a column titled: “Making sense of the depreciation of the Guyana dollar: the Jagdeo shock?” (SN: May 10, 2017). There I explore the “dem-boys-seh” analyses on blogs, Facebook and in some quarters of the press that alleged that Mr. Jagdeo and his “Newly Emerging Private Sector” (NEP) were sabotaging the exchange rate.
In the same series, I examined another “dem-boys-seh” belief that the new government has been able to clamp down on the ubiquitous drug dealers and as result there is an FX shortage (See SN: May 3, 2017). The question of general political contest and the ex post exchange rate was discussed in the subsequent column: “Recent trends in the foreign exchange rate: could politics muck it up?” (SN: March 23, 2016).
At least ten other columns indirectly addressed the FX market. Exchange rates in the global market are perhaps the most informationally sensitive set of prices in the world. The Guyana-US$ exchange rate, in the local market, is also quite sensitive to changes in news, perceptions and information – except that prior to recent years the Bank of Guyana did not allow the rate to vary significantly when information and perceptions change. Therefore, events taking place in the broader political and social environment could also explain the increasing rate.
