Home' Trinidad and Tobago Guardian : March 3rd 2016 Contents March 3 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
The marginal decline in the value
of the T&T dollar has generated
mixed reactions from the busi-
ness community as to how this
would impact their businesses.
This is happening in the context of a reces-
sion in T&T.
According to the Central Bank, on January
4, the selling rate at commercial banks for
US dollars stood at $6.4498 while on February
29 the selling rate was $6.5511, which means
there was a 1.58 per cent decline in the value
of the TT dollar.
In a January 5 article, CNN Money reported
that: "Emerging markets are feeling the dollar's
heat. The Turkish lira has lost 2.5 per cent
against the dollar since New Year's Day, while
the South African rand and the Brazilian real
have each shed 1.1 per cent. Colombia's peso
is down 1 per cent versus the dollar as well."
But a depreciating rate is not the only chal-
lenge that business people in T&T face when
it comes to the US dollar as the problem of
shortage of supply has leaked into 2016 with
But not everyone can sell foreign exchange.
According to the website of the Central Bank,
anyone selling foreign exchange must have
a license to do so.
"The Bank is responsible for the manage-
ment of the foreign exchange market in the
public's interest. Under the Exchange Control
Act, the bank licences authorised dealers in
foreign exchange which include commercial
banks and non-bank financial institutions.
The bank has also licensed a number of insti-
tutions to operate as bureaux de change."
Business Guardian found some stores in
Port-of-Spain that sell US currency in
exchange for TT dollars. At a children's cloth-
ing store on Henry Street, a sign was posted
on the front window stating that its selling
rate was $6.35. A store clerk, speaking on
condition of anonymity, said it is easier for
its customers who don't want to go to the
bank to have their currency changed at the
store. She wasn't aware that anyone buying
or selling foreign currency needed a licence.
At a cloth store on Queen Street, the selling
rate of the US dollar there was $6.40. A clerk
there said she had been employed at the
establishment for many years and the com-
pany has been selling and buying currency
However, at a trading enterprise on Henry
Street, while there was a sign that said $6.75,
when a prospective shopper made enquiries
this week she was told that the store only
sold US dollars if the customer buys an item
in US currency.
Staying on that street, another trading
enterprise sold US currency at $6.20 and a
cloth store on Frederick Street sold the foreign
currency at $6.30. The store clerk said it is
not unusual for customers to walk into the
store asking for their currency to be
Meanwhile the exchange rate offered by
one bank on Tuesday was $6.57 while the
rate offered by Unit Trust Corporation on
Tuesday was $6.80.
How does this impact the economy?
Republic Bank president Nigel Baptiste in
emailed responses said the change in the
exchange rate has been neutral on the bank's
"From a balance sheet perspective, these
investments are backed by US dollar liabilities
so there is no impact there. As a result, the
only impact would be that the net interest
income (the spread between what we earn
on the investments and what we pay on the
liabilities) in USD would translate into a slightly
higher TT amount."
Commenting on how the change in depre-
ciation is likely to impact the bank's operations
in Ghana and Suriname, he said: "It will
improve the return to the bank of these equity
investments when converted back into TT
dollar. It will also increase the absolute size
of these investments in the TT dollar equiv-
alent balance sheet."
Referring to the supply of US currency in
the market, he said banks are faced with a
situation of balancing demand with supply.
"The supply has not increased but there
is now a greater degree of reliability with
respect to when the inflows can be expected.
This is a first step in restoring confidence.
"There was never a quota system in place.
All banks have to do is juggle the many com-
peting requests for use of the limited supply
- corporate, retail, credit card. Customers
are still complaining about the availability,
and this unfortunately is unlikely to improve
in the short term unless we all accept some
responsibility for effecting the required
Overall, he said the taste patterns of the
people need to change to one which is more
"Many of the assumptions which we treated
as facts over the last 10 plus years need to
be re-assessed. We are a small open economy
and almost everything we consume is import-
ed. We therefore need to review our con-
sumption decisions to reduce the pressure
on the demand side - whether it be the fre-
quency/quantum of our online purchases,
the replacement schedule for our vehicles,
purchase of imported fruits and vegetables,
etc. Our ability and willingness to adjust will
influence the magnitude of the current chal-
Director of national brands and export
manager at Vemco, Christopher Alcazar, said
as the TT dollar continues to depreciate the
costs of foreign inputs into manufacturing
continue to rise. This may mean he said that
prices may rise on some of their products.
"The further it goes (the depreciated dollar)
the more difficult it will be to hold prices in
the local market and we will need to review
the situation as it happens. This will lead to
costs increase for consumers."
He said even though it costs a lot to import
some inputs for manufacturing their products,
the company started to buy local input for
its products. But, "unfortunately we simply
can't always get the high volume we require
locally. But given some local inputs we do
expect locally manufactured products to
remain more competitive than imported alter-
Addressing the issue of US currency he
said sourcing US currency has become more
difficult compared to 2015.
"Currently we continue to prioritize on
ensuring we have raw and packaging material
to keep our plants in production while quite
simply to buy USD to pay suppliers has
become a nightmare.
"Daily we are in cues with most financial
institutions and still receive a mere fraction
of our requirements to pay our overdue bills,
if we receive anything at all. Rather than run-
ning our business we are managing these
fires daily. This situation is also driving costs
as preferred suppliers are locking us off due
to late or non-payment forcing us to have to
purchase from more expensive alternative
Alcazar predicted that very soon imported
brands which the consumer is accustomed
to seeing n supermarket shelves would no
longer be there.
"Luckily for us in T&T we have a thriving
food and beverage manufacturing sector locally
who will keep shelves packed, food available
for our tables and people employed. My ques-
tion would be what are we doing as a people
to prioritize USD supplies and support for
these large employers, exporters and earners
of USD for our economy."
Big range in 'black'
market for US dollars
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