Central Bank plugged US$6.6M to commercial banks in first quarter

Central Bank, for the first three months of this year, plugged some US$6.6M into the local market.

According to the Bank of Guyana’s statistical abstract up to March, as published on its website, the intervention would be less than the US$9.5M released for the first quarter last year.

However, the release of the foreign currency in the first quarter could be taken as an indication of what is likely to happen this year with sugar exports prospects already looking dim, at least for the first crop.

According to the figures, for the entire 2015 – the year when the David Granger administration took office – Central Bank was only forced to step in with US$5.75M. This increased dramatically last year when more than US$27M was released into the market.

Central Bank would release when asked by the commercial banks.

In January, US$2.9M was released with US$400,000 the next month. In March, in an indication that something was happening to the market, US$3.3M was released.

The large interventions last year of US$27M have been explained by Government and Central Bank. The loss of the Venezuelan rice market coupled with poor performance from sugar and forestry saw a shortfall of export earnings of almost US$30M. The foreign exchange market was also taking a beating for illegal operations, in which a number of cambios and others were colluding. For example, it appeared that traders from Trinidad and Barbados were coming here, dumping their currencies, and buying up the precious foreign exchange. Central Bank has since halted its trade with the two currencies.

Both countries are facing US dollar shortages amidst a slowdown in their respective economies.

Guyana is also being pressured by two other troubled neighbours – Suriname and Brazil – with indications that a significant amount of cash is making its way to both countries.

With regards to Brazil, several hundred miners are operating in Guyana, with cash needed. It is the same for a number of Suriname companies operating here.

Already, Central Bank has issued a number of guidelines to cambios, ordering that their rates not be more than a $3 spread.

Central Bank has been reporting that the foreign currency situation has stabilized.

Banks have been paying more attention to who comes off the road for foreign currency, it was said. That does not translate to a foreign exchange crisis.

With regards to sugar, earnings are likely to take a beating again this year. Last year, production fell from almost 230,000 tonnes in 2015 to 180,000-plus tonnes.

With the newest factory – Skeldon in East Berbice – down for the first crop because of a boiler problem, officials have been forecasting a shortfall of the figures. Of course, this will impact export earnings.

GuySuCo’s foreign exchange earnings, despite the massive losses being racked up annually by the state-owned entity and the billions of bailout dollars, have been a boon to the economy.

Government has been assuring that it has significant reserves and that the situation is quite stable.

(KAIEITEUR NEWS)