BoG refutes claims of US$1/$230; urges businesses to use other banks for foreign exchange
The Bank of Guyana (BoG) says it is concerned with a statement issued by the Guyana Manufacturing and Services Association (GMSA) titled “The Effects of the Rising cost of Foreign Exchange on the Manufacturing Sector.”
The GMSA yesterday (Wednesday, March 22, 2017), released a statement in which it noted that “the real exchange rate when available being used for the purchase of foreign exchange is $230.00 for the replacement of imported inputs into the sectors.”
The financial institution is refuting those claims noting that “the rate quoted by 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.”
The Bank said the Association is adding fuel to the “rising speculative and destabilising activities in the foreign exchange market,” all of which could be harmful to the economy.
According to information released by the financial institution, 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, the bank said, while total purchases and sales at the bank Cambios were US$19.6 million and US$20.4 million respectively.
The aggregate working balance at the bank Cambios was US$13.7 million at the end of business on the 17th March 2017, and one bank accounted for 32.8 % or US$4.5 million of the total working balance.
The Bank of Guyana statement noted that demand at the end of last week was US$8M, with two banks accounting for the bulk of the demand.
In this regard, it is advising businesses “not to depend solely on one bank, but to pursue other banks to meet their demands for foreign currency at a competitive rate.”
Additionally, the BoG noted that there has been hoarding of foreign exchange by exporters, as 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,” contributing to the instability and depreciation of the rate, the statement added.
Thr Bank of Guyana reiterated that there is sufficient foreign currency in the market to meet legitimate demand and calls for patience and co-operation from stakeholders to ensure that there is no undue speculation and further deterioration in the rate.