Stop hoarding foreign currency — Bank of Guyana urges exporters
Governor of the Bank of Guyana, Gobind Ganga
Governor of the Bank of Guyana, Gobind Ganga

The Bank of Guyana (BoG) has accused exporters of hoarding foreign currency, resulting in the devaluation of the Guyana dollar.
The Central Bank in response to calls made by the Guyana Manufacturing Services Association (GMSA) for the Government and the bank to take steps to stabilise the value of the local currency, said the hoarding of foreign currency by exporters is “evidenced by the large foreign currency balances that are being held in their exporters’ retention accounts”.
“Instead of using these balances to complete their transactions, they have been sourcing foreign currency in the market. This has added further pressure on the demand for foreign currency and reduced the supply to the market. Both of these factors have contributed to the instability and depreciation of the rate,” the bank said in a statement Thursday.
On Wednesday, the GMSA expressed disappointment and worry over what it has described as the “rate of deterioration” of the Guyana dollar.
In a statement to the media, the body representing manufacturers said it deliberated deeply on the woes of the manufacturing sector and members expressed concern about the devaluation of the Guyana dollar and “the real exchange rate”.
The GMSA said it estimates that the real exchange rate when available being used for the purchase of foreign exchange is $230 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 statement to the media said.
But notwithstanding the concerns raised by many in the private sector about the exchange rate of the currency and the value of the Guyana dollar, the bank maintains that there is no shortage of foreign currency here and that the exchange rate is stable.
“The Bank of Guyana (BoG) notes with concern a statement by the Guyana Manufacturing and Services Association (GMSA), which contained a number of inaccuracies.

MISLEADING
First, the claim by GMSA that the ‘‘effective rate for the US dollar is G$230’’ is not only misleading, but is of a kind that does nothing more than add fuel to the rising speculative and destabilising activities in the foreign exchange market, all of which could be harmful to the economy,” Central Bank stated.
Additionally, the bank said the rate quoted by the GMSA is not a uniform transaction rate; rather, it is the online rate charged by one of the largest commercial banks in Guyana for its credit and debit card transactions, which represent a very small share of the cambio market transactions.
For the week ending March 14-17, 2017, the weighted average buying rate was G$214 while the weighted average selling rate was G$218. The turnover for the week was US$40.0 million. Total purchases and sales at the bank cambios were US$19.6 million and US$20.4 million respectively, the statement noted.
Moreover, the bank said that the aggregate working balance at the bank cambios was US$13.7 million at the end of business on March 17. One bank accounted for 32.8 per cent or US$4.5 million of the total working balance.
Demand at the end of the week stood at US$8.0 million, with two banks accounting for the bulk of the demand.
“The Bank of Guyana wishes to advise businesses not to depend solely on one bank, but to pursue other banks to meet their demands for foreign currency at a competitive rate.
“The BoG continues to reiterate that there is sufficient foreign currency in the market to meet legitimate demand. The patience and co-operation of stakeholders are needed, therefore, to ensure that there is no undue speculation and further deterioration in the rate,” the statement said.

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