Bank of Guyana injects US$80M in Commercial Banks to stem foreign currency shortage

Bank of Guyana injects US$80M in Commercial Banks to stem foreign currency shortage

Amid a shortage of foreign currency in the country, the Bank of Guyana has been forced to inject more than US$80M into the foreign currency market, on instructions of the Government.

At a press conference on Thursday, Vice President, Bharrat Jagdeo said he met with the members of the local Banking Sector along with the Minister responsible for Finance, Dr. Ashni Singh, and a decision was taken to have the Central Bank intervene in the foreign currency shortage, as complaints were gathered from the Banking and Private Sectors about the shortage.

“We have asked the Central Bank…to make a major injection in the foreign currency market,” the Vice President told reporters. 

Today, the Governor of the Bank of Guyana, Dr Gobind Ganga told News Source that the injection was to the tune of more than US$80 million.

The Vice President said the Government took a decision to intervene due to the impact that the shortage of foreign currency was having on the private sector, and the local market.

“The reason why we did this at this time is because the wait was a little bit too long. The wait was a little bit too long and it was starting to affect people’s payments, and you know if you have to pay, it affects your track record, if you don’t pay on time. So, there has been a major injection into the market,” Jagdeo said.

Mr. Jagdeo attributed the high demand for foreign currency to the growth in the economy, in particular, the increase in imports. 

 “So that’s natural that once the economy is growing, there will be a greater demand for foreign currency for legitimate transactions, that is, to import more goods, import more machinery and equipment, consumer goods, to make payments for a lot of the intermediate goods, and therefore, that the market may experience from time-to-time, some mismatches. So far, we had seen that overall, the market was clearing itself, although, there was a wait list for a number of people, importers, that the market was clearing itself. Because on a daily basis, we watched the aggregate foreign currency available to the bank and their aggregate demand. Some banks may have a mismatch. They may have less foreign currency and more demand, but another bank may have more foreign currency and less demand. So, we look at the aggregate,” the Vice President explained. 

He said as the Government closely monitored the situation, and found that the “short-term mismatches,” had placed an upward pressure on the exchange rate causing the Guyanese Dollars to depreciate. 

Jagdeo said while the Government does not want the local currency to increase in its value, it does not want the currency to depreciate either.

He said the Government is currently pleased with the exchange rate, and will continue to monitor the situation. 

According to the Foreign Exchange Rates published by the Bank of Guyana, the US dollar is being bought at GUY$207.98 and sold at GUY$210.45. 

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