The foreign currency situation
From page 12
It could be seen also from the Table that as at October 2015, the cambios would have had an estimated US$1.8 million in stock or supplies of foreign currency. Even without full information, one could spot from the data in the Table that the cambios would have been about US$6.2 million short at the start of October 2015. That negative figure represents the supposed condition in the market that cambios are crying out about now. The beginning inventory for October 2015 was presented as a negative figure and not as zero to show that at a time when the cambios should have had a crisis there was no alarm. The cambios were able to replenish their stocks by either obtaining foreign currency from the Bank of Guyana or by delving into money that was stashed away somewhere. The point being made here is that at a time when the cambios needed to find foreign currency to carry on their business, they did and there was no fuss being made about availability.
Fast forward to October 2016, the inventory of foreign currency with the cambios was vastly different from what obtained in October 2015. The cambios would have had at least US$21 million on hand or almost 12 times more foreign currency available than at October 2015. Further, in 2015, foreign currency that was in the market made up less than half of one per cent of the international reserves of the country in contrast to October 2016 when it made up three per cent. Yet, persons are trying to insinuate that the foreign currency market in Guyana does not induce or even exude confidence.
Something unusual
That the bank cambios are complaining should make it clear that something unusual is happening in the foreign currency market. The data presented above reveal that the Guyana economy, with all its challenges, has been generating enough foreign currency to support business transactions. With the internal variable behaving orderly, the situation does not call for devaluing the currency or allowing its value to depreciate since the level of business transactions is generating acceptable amounts of foreign currency. Raising the interest rate to limit the level of economic activity and, as a consequence, the demand for foreign currency is also unacceptable for it would generate unnecessary economic distortions and set the economy back further. The shock intervention is coming from an external force either in the form of political instigation or sales that are not linked to the activities or condition of the domestic economy.