The United States dollar exchange rate dropped almost ten TT cents yesterday, one day after the Central Bank and the Bankers’ Association (BATT) met to determine how best to manage the tightness in the domestic foreign exchange market.
The exchange rate, which had been hovering around TT$6.45 to US$1 dropped to $6.343 yesterday, following a US$30 million injection into the system on Wednesday by the Central Bank, along with an assurance to BATT that, depending on commercial banks’ demand, the bank will intervene with more timely, sustained interventions to maintain equilibrium in the market.
This is the lowest rate since 2009.
“It’s a function of supply and demand. The market is flush (with US dollars) as predicted, especially with energy company conversions and the US$30 million add from Central Bank, so supply has risen in the market,” BATT president Larry Nath said yesterday.
He warned that the rate could contract again in July as supply contracts.
Central Bank Governor Jwala Rambarran visited commercial banks along Independence Square, Port of Spain, yesterday to see how customers and the system were faring.
“(The meeting yesterday with BATT) was to remove the uncertainties of supplies of foreign exchange into the market, and following that meeting the bankers gave their assurances to the community that their demands will be met—customers are coming away satisfied that their demands are being met,” he said.
He said the bank is projecting significant inflows of foreign exchange in the next two weeks to three weeks of June, which is a typically liquid month; he added that the Central Bank is committed to meeting (any) shortfall.
Rambarran also met with several members of several business chambers yesterday, including the Trinidad and Tobago Chamber of Industry and Commerce; the Trinidad and Tobago Manufacturers’ Association and the Supermarkets’ Association.
Chamber chief executive Catherine Kumar said the meeting has helped the organisation understand that there will be a level of predictability about injections into the system, the Chamber’s members willnow has certainty. Nicholas Lok Jack from the TTMA said since injections last month from the Bank to alleviate trade tightness, TTMA members have seen a better disbursement of funds, and expect it to be up to 100 per cent in the coming weeks.
Former president of the Supermarkets’ Association Balliram Maharaj said if the two per cent drop in the exchange rate is maintained then the country can see a drop in prices as it relates to importation in goods and services.
Group Treasury and Foreign Exchange head at Republic Bank, Charles Mouttet said the country has enough foreign exchange on a clobal basis, but the tighteness situation had created a “self-fulfilling prophcy” where people are concerned and so overbuy, and contribute to the tightness.
“We have enough on a global basis. There have been some issues in distriobution that commercial banks have been resolving with the Central Bank. It’s never going to be you walk in and ask for $5 million and you’ll get it. We will meet the demands that are normal from our corporate clients. We do not expect any difficulty in meeting legitimate demands from our retail customers for travel, education, so we expect things to be very settled going forward. What we are seeing now is stability and ready access to legitimate demands to US dollars. So we don’t anticipate problems...it’s just about getting the dollars to the ppl who need it when they need it. People do not need to over buy and hoard: the money will be there when they need it,” he said.