The foreign exchange problem

The foreign exchange problem

Sunday, November 21 2010

Who tried to buy US dollars by the banks recently would know that there is a queuing system and hardly ever get your complete request in an application. For those of us in business, this is a much more acute problem since even with queues, only a portion of your US dollar requirements is available for purchase, sometimes as little as 20 percent. Business community for more than a year now has plagued this situation and company in danger of losing their credit with foreign suppliers of ? conditions and in fact has already impacted several companies places. The situation can lead, if not already in existence, how some companies to buy US dollars from other companies or persons to have to fall back to avoid a ready supply run into conflict with the supplier credit to a black market for US dollars. Another way for the acquisition of the US dollar is to buy other currencies by banks to pay US dollar bills.The transaction costs that continue this two-step conversions associated costs the U.S. Dollar.Daher while dollar exchange rate TT to the US dollar remained relatively stable by the Central Bank with an average rate of $6.37, in fact, business is paying up to $6,45 for a significant percentage (maybe up to 50 percent) its US dollar, the average cost closer to $6,41. It is only a matter of time, before there were its way into the cost of this impact on inflation again finds.

This Forex situation is a mystery as the Central Bank has stated that its foreign exchange reserves, with import cover at 13 months. It seems therefore that is an obvious answer to inject additional foreign currency in the financial system. However, the Central Bank pointed out that it has never injected unprecedented amounts of foreign currency in the financial system, in 2009 and again in 2010, and their experience shows that such amounts are usually very quickly absorbed with little lasting effect on the long queues.

Where go therefore, the US dollar?The Lieutenant Governor said Chamber members last week that there are more than 77,000 foreign currency accounts in this country, now amounting to approximately US $3Bn.It therefore seems that buy some individuals and companies and save US as a buffer, at the minimum Zinssatz.Die situation can be worse than many other purchase, send US abroad for store or investments, everything since TT dollar liquidity is so high and it no interest rate differential between the US and TT is currency deposits promotion of domestic savings in TT$.

This is a serious matter that must pay attention to the authorities, otherwise it could have far-reaching consequences.Once remains for the average person challenging access to foreign exchange, is the perception of lack of reaction of storing verursachen.Da which Central Bank is inclined to be cautious and reluctant, to flood the market with more US dollars, we could well reach a standoff position for legitimate trade.

This is a very delicate situation with no easy solution. all parties have valid arguments for your conduct and unless urgent action be taken no one is willing to level.the situation calls for more dialogue and to avert a crisis affecting larger understanding among all stakeholders. the Government must be prepared, be an integral part of this dialogue as the underlying cause of the situation could well be a crisis of confidence.

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