Central Bank intervenes to reduce shortage of foreign currency in Guyana

The Bank of Guyana (BoG) has intervened to address the shortage of foreign currency in the local market, following complaints, especially by the business community for several months now.
This was revealed by Vice President Bharrat Jagdeo during his weekly press conference on Thursday. He explained that the growing demand for foreign currency for importation and other transactions led to long waiting times and a mismatch in demand and supply across the banking sector.
“We know that with a rapidly growing economy and with an increase in imports there will be greater demand for foreign currency… So, that’s natural that once the economy is growing, there will be greater demand for foreign currency for legitimate transactions, that is, to import more goods, to import more machinery and equipment… and to make payments for a lot of the intermediate goods, and therefore, the market may experience from time to time, some mismatches,” he noted.
According to the Vice President, it was observed that the market would generally clear itself despite several waitlists for importers to access foreign currency within the local banking system. As a result of this, the Government held a meeting with the commercial banks on the situation last week and subsequently engaged the Central Bank to intervene to regulate the local foreign currency market.

“We have seen a situation where we’ve had a short-term mismatch and we’ve asked the Central Bank…to make a major interjection in the foreign currency market and this morning most people said that the market is entirely cleared,” the VP indicated.
Jagdeo further noted that the Government consistently monitors the banking sector and can intervene at any given time. “Our capability is strong to do this several times in the year,” he added.
Explaining why this move was not made earlier, the Vice President said “We had seen that overall, the market was clearing itself… because daily, we watch the aggregate foreign currency available to the bank and their aggregate demand. We don’t want the rate to appreciate too much because that will lead to another set of problems, but we don’t want the rate to depreciate too. And so, we believe that the equilibrium that the rate has struck now is the ideal one for the economy and we’re keeping a close watch on the market.”
Since last year, the private sector has been complaining bitterly about a shortage of foreign currency on the local market – something which the Guyana Government as well as the Central Bank has denied.
In fact, the BoG had reported earlier this year that as of April 15, 2024, there was some US$54 million in the local banking system, adding that this was an adequate supply of US dollars to meet demands.
“The BoG would like to reiterate that the banking system with an average monthly turnover over USD500 million, has an adequate supply of US dollars to meet demand,” the Central Bank said in an advertisement published in the state-owned newspaper back in April.
The Central Bank had explained that while available funds are not evenly shared among the commercial banks and there may be a short waiting period for the transfer of funds, it noted there is enough to cover the cash flow needs of transactions arising from businesses in Guyana.
According to the BoG, it has also been injecting US dollars into the banking system and will continue to do so as necessary.
The BoG had noted too that it is aware that some businesses are seeking funds to meet the same payments from more than one institution and there is a speculative queue for foreign currency because of a perception that there is a shortage of foreign currency.
Moreover, it stated that there is some hesitancy by commercial banks to tender invoices as required by the BoG which is used to monitor the legitimate use of funds.
“Cash flowing to the banks is cyclical, as such there will be periods of excess liquidity and periods of limited supply. The Bank continues to monitor the foreign currency position in Guyana to ensure there is no disruption nor adverse impact on economic activities,” the Central Bank noted. (G-8)