Media hype causes increase in demand for foreign currency

… shortage occurs on a regular basis – BoG Governor

Bank of Guyana Governor, Dr Gobind Ganga has blamed the sensationalisation by the media for a sudden increase in demand for foreign exchange.
Dr Ganga, at an emergency press conference on Thursday afternoon, said the issue of foreign currency shortage is obviously being sensationalised as there are usually bouts of shortages of foreign exchange in the financial system.

He said the Central Bank is currently working with the commercial banks to ensure an adequate supply of legitimate demands for foreign currencies.
“We have conducted as of today (Thursday) a market analysis and find that the immediate demand is at a maximum of about $6 million and this has moved from a working balance excluding commitment, from US$10.7 million on Monday (December 5), in terms of working balance. Request for foreign currency at that time was almost nothing. They had about US$8.3 million.
Ganga said it was following by a story by the Kaieteur News on Monday; the Bank was flooded with requests from the commercial banks for foreign currencies. He said however, that not all of the requests were found to be legitimate demands. The bank’s chief said it had requested from the commercial banks invoices to substantiate the requests, but only received letters or emails requesting a particular amount sent to the commercial banks.
“This situation arises out of this panic that started on Monday, because on Monday, there was a situation where the net balance in the banking system was US$10.7 million and there was a net to of $8.3 million,” he explained.
He said however, that the commercial banks have made great strides and success in satisfying most of the demands. He said he has already spoken to the Chief Executive Officers (CEO) of commercials banks who have committed to addressing the issue.
“This is something that occurs on a regular basis. From time to time, you will have this. But we do work with the commercial banks and the non bank cambios to resolve any excess demands, but as this time, there is not chronic situation out there, the commercial banks are dealing with this issue as we speak, some of them are bringing back some foreign currencies that they had elsewhere to address some of the demand,” Ganga said.
As I indicated, a number of people go to the bank and cambios requesting foreign exchange for speculative purposes and it is very easy. We have to be very careful.
We have also asked the banks to be careful, less the country ends up like Trinidad and Tobago, which is at this point unable to find some US$1 million to pay the Guyana Sugar Corporation (GuySuCo) and a private rice exporter who is owed US$6.7 million by Trinidad authorities. Speaking to officials at Central Bank there, Ganga said there is a situation where at least one commercial bank there does not sell foreign currencies.
The Central Bank Governor said the problem in Trinidad is now reflecting on Guyana’s system and that is one of the main reasons why Guyana has temporarily stopped the purchasing of Trinidad and Tobago and Barbados currencies from cambios here.
He said persons from those countries have been coming to Guyana and exchanging their monies for US dollars. “You have some of them who are coming in with huge amounts for speculative purposes and you have to filter those”.
The Governor maintained that there are no shortages and that no commercial bank has ever approached the Central Bank for foreign currencies and have been turned away.
“Every one of the commercial banks that approach us would have received currencies if demanded,” he assured. He however noted that for individuals requesting currencies must have some legitimate documentation upon request of the funds.
“You know people are travelling, most of them travel with currencies, it’s available. In terms of wire transfers, we may have an issue there and as I have indicated before, we are working with these banks to ensure that the demand out there is met”.