Home' Trinidad and Tobago Guardian : April 30th 2015 Contents Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
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APRIL 2015 • WEEK FIVE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
The last Sunday Guardian editorial
which was headlined, Caution
required on forex statements chal-
lenged a comment made by Min-
ister of Trade, Industry, Investment
and Communication Vasant Bharath at a man-
ufacturers function last week that the amount
of foreign exchange held in local bank accounts
totalled close to US$5 billion.
"It is a lot of money and it has developed
over a period of several years. It is one of the
issues why there isn t enough foreign exchange
in the economy as there ought to be," according
to a direct quote attributed to Minister Bharath.
To say that there was US$5 billion in held
in local, foreign-currency accounts is a gross
exaggeration as the amount of money held in
the foreign currency accounts of local banks
totalled US$3.6 billion at the end of January.
That s the figure that is on the Central Bank
Web site and that is the figure that a Central
Bank spokesperson last week confirmed was
the correct and most recent amount.
And, as the editorial helpfully pointed out,
the difference between US$5 billion and US$3.6
billion is 37 per cent.
The Sunday Guardian opinion also noted
foreign currency deposits had been remarkably
stable over the last five years: at US$3.80
billion in January 2010, and US$3.65 billion
with a range of between US$3 and US$3.9
Commercial banks TT dollar deposits on
the other hand, have grown from $74.26 billion
to $101.9 billion in that period.
Having been called out on the issue, the
appropriate thing for the minister to do would
be to issue an apology for misleading the nation
on a sensitive issue.
But, like God s face, a minister apologising
for an inaccurate or misleading statement, is
not something that any of us should expect
Clearly, the evidence does not support the
proposition that the problems that ordinary
T&T citizens and residents have in accessing
foreign currencies is as a result of the accu-
mulation of deposits in commercial banks.
But, if not the accumulation of foreign cur-
rency deposits, what is causing the
supply/demand imbalances from time to time
in the foreign exchange market?
In an interview with Fazeer Mohammed on
TV6 s Morning Edition on December 22, 2014,
Central Bank Governor Jwala Rambarran
admitted that this country s regulator of banks
receives information on their foreign exchange
inflows and outflows on a daily basis.
If this is so---and there is no reason to dis-
believe the Governor on an issue like this---
it means that the Central Bank knows by the
end of the working day the extent of demand
for, and supply of, foreign exchange at T&T s
It means that the Central Bank knows the
nature of the demand---for example, how much
is cash, cheques or wire transfers. And it means
that the Central Bank knows the composition
of the demand---for example, how much is
going to pay off credit cards, how much to
pay bills for retailers and how much for edu-
cation, vacation or investments.
If the Central Bank has this information
about the demand for foreign currencies, it
should also be in a position to know what the
unmet demand is at the end of each working
And one of the more interesting things that
the Governor said in that interview is that the
Central Bank has made an arrangement to
step into the breach if any commercial bank
Said Rambarran: "What we have done as
a Central Bank is to step in and we now have
US cash that would be available as a stop-gap
measure in the event that the banking system
is running low on actual US cash.
"It should not be an issue that you walk
into your bank branch and ask for actual cash
and they tell you they don t have any.
"We have also asked the banks to lift their
branch limits to a higher amount to accom-
modate that demand.
"Because we are there to meet the shortfall,
you should not be turned away."
So here is the Central Bank Governor saying
that ordinary T&T citizens and residents should
be able to walk into their bank branch and,
because the Central Bank is there to meet any
shortfall, no customer in this country should
be turned away.
Yet, everyday I hear complaints from peo-
ple---big and small---that there are issues with
access to foreign exchange...even including
accessing money in their own foreign currency
Questioned on April 20 by CNC3 business
journalist, Judy Kanhai, on whether it was
legal for a bank to deny a holder of a foreign
currency deposit account access to their funds,
Republic Bank s deputy managing director,
Nigel Baptiste, wrote:
Asked the same question, Scotiabank CEO
Anya Schnoor said:
The reasons why commercial banks cannot
meet their legal obligations to provide on-
demand access to money in foreign currency
accounts are, of course, quite interesting.
But if the Central Bank has made clear that
it is prepared to sell US cash to commercial
banks that run short, no bank should ever tell
an ordinary customer wishing to buy US$5,000
for a vacation that it does not have the quan-
tum of cash available to sell them.
What they should say is that we do not
have the cash at the branch today but, because
the Central Bank has assured it will cover any
cash shortfall, we will have it tomorrow.
If the commercial banks cannot put such
arrangements in place, then this is something
that the Central Bank should consider doing.
Are commercial banks hoarding US dollars?
It seems to me that local commercial banks
may seek to gather up as much foreign currency
as possible if they are doing large loans, large
acquisitions or syndications.
Let s say, for example, that Bank A is about
to make a large US$ loan to a local petro-
chemical company, or bank B is about to make
a foreign acquisition, would they be selling
US dollars to any of their customers who asks
for it---even those customers who have foreign
currency accounts with them?
Maybe the Bankers Association needs to
tell the thousands of people impacted.
Are banks hoarding US dollars?
Central Bank Governor Jwala Rambarran
Central Bank of T&T
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