PORT OF SPAIN
Finance Minister Larry Howai yesterday assured that there was no risk of any devaluation of the Trinidad and Tobago dollar.
The Minister was responding to statements made by the Opposition People’s National Movement on the new system of foreign exchange allocation.
Howai said there was more than sufficient foreign reserves to deal with the needs of the country.
He said foreign exchange reserves had continued to increase and now amounted to $10.3 billion, which was more than 12 months of import cover.
He said the issue was the new system put in place by the Central Bank.
“As with all newly-established systems, there has been some negative reaction and some initial administrative problems,” he said. “I know that the Central Bank Governor (Jwala Rambarran) is now considering what are the things he needs to do in order to ensure that the market has the foreign exchange it needs at the time that it needs it.
“Because it is a new system, it requires some behaviour change on the part of individuals. The Central Bank indicated to me that the system had a surplus of foreign exchange, but that is not what the business people are saying. It think it is the way in which the foreign exchange is now being shared up and divided up. And it is just a question of the Governor doing what is required to adjust the system. But from the point of view of additional foreign exchange, if he needed to put in additional sums, he can, because there is more than sufficient to meet the needs that exist in the market right now,” said Howai.
Asked why there was a change in the foreign exchange allocation, Howai said: “I think the Governor felt that the market had begun to evolve and it was important to stay in line with the market. I think part of the problem is that individuals continue with their old banking relationships. Because the system is close to an auction system, what has happened is that previously you (some banks) may have been able to get more of the foreign exchange, but now the other bank had bid and gotten more of it. Your customers have gotten accustomed to only coming to you (the bank) for foreign exchange. But I think we need to realise that foreign exchange is a commodity like any other commodity.
“And so if you (the customer) come to your bank and you don’t get it, you should go to the other bank and try and see if you can purchase it (there). But people get so used to dealing with one bank...and the behaviour change involved...people are sometimes reluctant to do. People don’t like to change their behaviour frequently and therefore it involves a little dislocation and that may be creating some issues,” he said.