Home' Trinidad and Tobago Guardian : March 29th 2015 Contents SBG6 PERSONAL FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt MARCH 29 • 2015
During the last
six months, the
interest rate on
issued by the
(OMOs or open market operations)
increased from 0.45 per cent to 1.35
While this rate may still appear to
be quite low, in mathematical terms
it is a 300 per cent increase in a six-
month period. Therefore, this matter
deserves a closer look.
The Central Bank is the monetary
authority for the country. Its ethos
includes "promoting monetary, credit
and exchange policies to foster mon-
etary and financial
Its tools to do so
ments, foreign exchange injections,
open market operations (OMO), the
repo rate---essentially the cost at
which the Central Bank lends money
to commercial banks---and "moral
suasion" (a persuasion tactic used by
an authority ie a central bank, to
influence and pressure, but not force,
banks into adhering to policy).
For years, one of the Central Bank s
main foci in the promotion of this
stability in T&T, has been controlling
inflation. Now it appears that address-
ing the issue of ultra-low short-term
interest rates is also of major concern,
which may be good news for investors.
For several years it has been difficult
for the average investor to realise a
positive real rate of return in T&T,
with headline inflation in double digit
territory and short-term yields less
than one per cent. Headline inflation
was 8.5 per cent in December 2014,
primarily due to the increases in food
prices, which was approximately 17
per cent year over year.
On the other hand, the average one-
year OMO rate, a benchmark for
short-term yields, remained below
one per cent. As a consumer, this
means that the costs of your goods
and services purchased were increas-
ing faster than the interest income
you would have generated on your
fixed deposits, fixed income mutual
funds and treasury bills.
This causes savings to be virtually
The Central Bank seems to have
noticed this trend and has been using
several of its monetary policy tools
to spur an increase in local rates.
A key tool in the Central Bank s
toolkit is the repo rate. In the second
half of 2014, the Central Bank
increased this rate by 0.25 per cent,
a third time to 3.25 per cent, likely
given the signals observed from the
US Federal Reserve regarding the
future path of its own monetary pol-
icy.There is also a positive growth out-
look for the local non-energy sector.
This sustained increase of the repo
rate has signaled to investors that
short term yields are expected to rise.
One of the
spin-offs of the
decline in short
term yields has
been the increase
in excess liquidity in the financial
system. Investors bought short term
instruments in droves and financial
institutions parked the funds at the
Central Bank. The chart below illus-
trates this over a five-year period.
The correlation of monthly com-
mercial banks excess reserves, com-
monly known as "excess liquidity",
and the one-year OMO rate is -0.74.
This means that it is highly likely that
as excess liquidity declines, the 1-
year OMO rates will increase.
In February 2015, excess liquidity
dropped to a low of approximately
$2.0 billion, after making highs of
over $8.0 billion in September 2013
and May 2014. With excess liquidity
currently averaging $3.0 billion, it
appears that the decline in liquidity
is sustainable and short-term yields
will continue to increase over the next
Already the one-year OMO rate has
moved from around 0.75 per cent at
the beginning of the year to 1.35 per
cent as the first quarter 2015 comes
to an end.
As such, it seems like the tools used
by the Central Bank are generating
the warranted response.
Short-term rates are rising. It
promises some relief for the infla-
Are you well-positioned to bene-
A distinguished Law Firm is seeking to recruit a qualified professional Financial Accountant
for the Firm's Port of Spain office.
The Financial Accountant is required to ensure the accurate preparation of the financial and man-
agement accounts of the firm, coordinating the annual audit, making recommendations for allocations
within the general ledger and maintaining the accuracy of all accounting records; based on account-
ing standards and statutory requirements; whilst ensuring that optimal service levels are met.
PRINCIPAL DUTIES AND RESPONSIBILITIES
1. Compiles the financial statements in accordance with schedules.
2. Compiles the annual budgets. Prepares management reports as required, analyses the
accounts and reports on and accounts for variances.
3. Coordinates the annual audit and complies with the audit schedules and requirements.
4. Identifies and implements initiatives to improve the quality of the accounting function including
documenting and updating systems and procedures; ensuring optimal use of accounting
software applications and compliance with international financial reporting standards.
5. Reviews the accuracy of the payables and receivables functions and ensures the reconciliation
of the bank accounts.
6. Ensures the accuracy of the payroll administration.
7. Reviews the insurance coverage on all assets to ensure containment of risks.
8. Supports the Treasury Management function, financing of asset acquisitions and management
of funds held in trust.
9. Manages the responsibilities of the accounting department, makes recommendations for the
allocations within the general ledger and institutes checks and balances to ensure the integrity
of accounting practices.
10. Supervises all direct reports, monitors performance to achieve a high-performing work team,
appraises performance and develops and implements performance improvement plans.
11. Any other related duties as assigned.
QUALIFICATIONS AND EXPERIENCE
• ACCA qualification or equivalent
• Bachelor's Degree In Accounting or Administration would be an asset.
• Five (5) years' experience in financial accounting.
KNOWLEDGE AND SKILLS
• Sound knowledge of accounting standards and practices.
• Excellent knowledge of accounting and reporting requirements.
• Good analytical and problem solving skills.
• Good communication and interpersonal skills
• Must be proficient in Microsoft Office Suite.
• Confidential, honest, responsible.
• Results oriented.
Applicants who meet the criteria outlined above should forward their curricu-
la vitae together with the contact details of two referees by the:
31st March, 2015 to:
The Human Resource Manager
P. 0. 80X 75, Port of 5pain,
Trinidad and Tobago.
Unit Trust Corporation
Relief for inflation-ravaged
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