THE government’s intervention in the foreign exchange market has to be carefully calibrated, People’s Progressive Party/Civic (PPP/C) General Secretary, Dr Bharrat Jagdeo has said.

During a press conference on Thursday, he said that there must be careful management of the local financial system to avoid “leakages” and to ensure long-term stability.

He said: “So, the dollars are a bit scarcer because we don’t sell too much dollars. We sell to the banks through transfers directly to the bank accounts, etc. So, that is an issue, not because of the lack of availability of money, but it’s money, for example.

“The currency, the currency is sometimes scarce, because if you’re going to buy, you may not get the currency at the time you want, and some people may buy and hoard for themselves the currency. But we have an enormous capacity to intervene in this regard, but it’s carefully calibrated, enormous capacity.”

He acknowledged that hoarding behaviour is contributing to rising daily exchange rates, a trend that has raised concerns among importers and businesses.

Within this light, he said that the government is investigating how they are financing their operations.

“We’re watching carefully. So, we’re watching all of these things. Don’t think that we’re not watching what’s going on here and you’re going to see enforcement action against a lot of those people. You recall, we’ve done a lot of sting operations in the past and a lot of those will continue,” he said.

In April, Vice President Jagdeo and Finance Minister Dr Ashni Singh, along with Central Bank Governor Dr. Gobind Ganga, met with the Chief Executive Officers and other representatives of commercial banks to discuss recent developments in the banking system, specifically in relation to the market for foreign exchange.

At the meeting, note was taken of the continued availability of adequate levels of foreign currency in the financial system as a whole to meet ongoing demand, despite occasional timing differences.

In order to ensure that pending requests for foreign currency are met in a timely manner, the decision was taken that a sum of US$100 million be injected into the market with immediate effect and distributed across all commercial banks. This injection provided immediate relief to the system in meeting pending demand for foreign currency, while the temporary timing mismatches unwind themselves.