Home' Trinidad and Tobago Guardian : January 3rd 2017 Contents commentary A17
Tuesday, January 3, 2017 guardian.co.tt
HAS THE 'MANAGED FLOAT' BEEN PROPERLY MANAGED?
RANDALL DE FREITAS
Facing the persistent and in-
creasingly severe foreign currency
shortages, I think that it is warranted
to ask whether the "managed float"
has been properly managed over
the last decade. While the drastic
reduction in revenue from energy
and related exports can be linked as
the direct cause of the shortages, it
appears that insufficient attention is
being put towards indirect but relat-
ed factors when hydrocarbon prices
were at their peak.
The continued shortages of US
currency, as highlighted by business
leaders, mean that there is a con-
tinued strong local demand by the
population for imported products.
Fundamentally, this demand must
be driven by the continued availabil-
ity of TT dollars from consumers to
purchase these imported products.
Over the past couple of years, the
demand appears to have remained
strong despite a weakening econo-
my, retrenchments and significant
cuts to public spending. It can be
assumed therefore that there is a
strong supply of TT dollars from
consumers which has sustained the
high levels of purchasing power.
Evidence to support this assertion
is the continued over-subscrip-
tion of government-issued TT
dollar bonds, the low interest rates
on deposits at banks and the high
amounts of cash held in savings and
money market instruments locally.
Given the abundance of TT dol-
lars, it is worthwhile to ask whether
this is healthy for our economy,
given its structure and character,
and whether the Central Bank could
have managed the money supply
more effectively. In particular, the
windfall revenues from the high
prices of hydrocarbons in 2007 and
2008 supplied the government with
an abundance of US dollars, much of
which was converted to TT dollars
and subsequently created the abun-
dance of TT dollars that persists to
However, by basic supply and
demand, the high supply of US dol-
lars during this 2007-2008 period
should have made the US dollar less
valuable relative to the TT dollar and
therefore the TT dollar should have
appreciated. If it had appreciated,
the number of TT dollars for each
US dollar would have been less (say
TT$4 instead of TT$6 for each US
dollar) and there would have been
less TT dollars in the economy.
This suggestion raises questions
of whether our "managed float" has
been and is currently being prop-
erly managed by the Central Bank.
Would we have been in a much
better position had there been a
free floating dollar that would have
adjusted itself upwards when US
dollars were abundant? Would the
correction from a free floating dollar
have already adjusted downwards
more significantly in response to the
scarcity of US dollars?
The sustained and robust TT dol-
lar purchasing power would usually
be considered positive during an
economic downturn but in T&T's
case, the majority of products we
consume is not produced locally.
The result is that although demand
is still fairly strong, it does not con-
tribute to sustainable economic
development as our businesses are
largely characterised by distribution
or extensions of the supply chains of
foreign companies. Moreover, it can
be argued that there is an illusion of
purchasing power if everything we
consume is imported and supported
by rapidly declining availability of
foreign currency to fund this con-
Although the exchange rate has
been adjusted downwards over the
past few months, the persistent de-
mand pressures on the TT exchange
rate against foreign currencies are
likely to continue as there is still high
TT dollar liquidity in the economy.
Factors such as the expected con-
tinued increases in US interest rates,
the draw-downs on US dollars in
T&T's reserves to maintain the ex-
change rate and the increasing Debt-
to-GDP ratio are likely to exacerbate
the challenges related to foreign
Moreover, as a managed float,
should the Central Bank have made
larger and faster adjustments to the
exchange rate over the past year?
Is the attempt to maintain the ex-
change rate at the current levels
driven by short-term objectives
that may lead to a larger shock in
the medium-term? Is it effective to
dampen demand by attempting to
influence the supply side?
THERE IS A NEED FOR MORE
CRITICAL ANALYSIS OF THE
SITUATION AND MORE ROBUST
MEASURES TO BE TAKEN IN THIS
...by basic supply and demand, the high supply of US dollars during this 2007-2008 period should have made the US dollar less valuable relative to the TT dollar and
therefore the TT dollar should have appreciated. If it had appreciated, the number of TT dollars for each US dollar would have been less (say TT$4 instead of TT$6 for each
US dollar) and there would have been less TT dollars in the economy.
SOUTH FAMILIES WELCOME NEW YEAR BABIES
Eight families in south Trinidad
welcomed new arrivals in the first
hours of 2017 Sunday. Among them
was Linda Deonarine whose baby
boy, Nile Zane, was the first born at
the San Fernando General Hospi-
tal. He arrived at 1.07 am weighing
2.07 kilogrammes. However, the
first baby born in the south west re-
gion was a girl delivered by Tenisha
Thomas at 12.07 am at the Point For-
tin Area Hospital.
Pamela Jagdeo --- Congratula-
tions to mom and babe.
Jaleana Sapna Seecharan ---
Omg congrats to Linda and Ricky.
Antoinette Moore --- Finally
something positive... I love it.
First murder for
the year in Arouca
Ryan Winter, 44, an Arouca father
of two, became the first murder vic-
tim for 2017 when a gunman entered
his home at Thomas Street at 3.30
am and shot him twice in the chest
and two times to the head. He died at
Anthony Persaud --- Very sad.
First day of the year and this had al-
ready started. More of what to expect
the rest of the year. No regard for life!
Camille Caruth --- When the kill-
ing will stop? God help us
Cherylee James --- Steups anoth-
er murder! Please stop it, I am fed up,
why take this man's soul?
Natalie Eudovic --- Jesus! U
telling me bandits don't even think
about ringing in the new year in
peace! Wow! Just sad. May this man
Tamika Sharpes --- It's sad how
some people are on here making fun
of this. I guess death only matters to
some when it hits home...... Smh
Haroon Mohammed --- Sadly
a lot of these killings that drive up
the murder toll are not random,they
are all part of a bigger picture of the
many ills plaguing our society today
and has been going on for decades.
Now I am not saying that this par-
ticular murder is related but all of
this senseless killings to us have
much greater meaning to the perpe-
Catylin Joseph --- I am sorry for
the generation growing up in this
believing this is normal for Trinidad.
I am from an older generation where
we walked the road in peace at any
hour and murder was unheard of.
And the politicians on both sides are
so consumed with power and them-
selves that they care nothing for the
country. In five years we would be
unrecognizable as a country.
Amber Gonzales ---Sadly the ed-
ucation system is leaving their minds
void of intellectual development, by
not ensuring that they learn to read,
write, comprehend and think and
hungry for education before they
leave primary school. They are then
very, very, very frustrated at second-
ary level and open to other elements.
First baby of 2017
born at midnight
At the stroke of midnight, Cire
Thomas-Lewis was the first baby
born at the Port-of-Spain General
Hospital (POSGH). The healthy baby
girl weighed in at 3.16kg and is the
first child for Jeunnessa Thomas, 30,
Krystal Ramjattan --- Congrats
mom and that sweet baby.
Kelly Redz Donatto --- This is
Denise J Charles ---Congrats to u
and your newborn, I know she would
Swanky Singh --- Congratula-
tions, welcome to d world baby girl.
Murder suspect found
hanging in cell
Joel Julien Investigations are con-
tinuing into the death of Joel Pompey
who was found hanging in his cell
days after appearing in court for the
murder of his 15-year-old stepson.
Tommy Stevenson --- Say what
allyuh want I dont know the full sto-
ry but I ain't putting my hands in fire
for no 15-yr-old stepson.
Hubert Thode ---The only murder
suspect caught killed himself... smh.
Plenty noise but
Defying a crackdown on ille-
gal fireworks, citizens across T&T
played a New Year's Eve cat and
mouse game with the police, releas-
ing scratch bombs and noisemakers
to ring in 2017.
Andrew Jodhan ---I'm sure the
police did their best I mean it's hard
to arrest people when the evidence
goes up in smoke literally and people
don't stick around after setting them
off how do you expect them to arrest
Vaughn Ramdeen ---I heard
scratch bombs in my area but you
can't tell who was throwing it.
Amanda Thomas ---Police were
out and about last night in area.
Rea Achong de Gourville --- To -
night it is ridiculous in my area. They
keep waking my baby. I am so fed up.
Vilma Seusankar --- Police do
not react to scratch-bombs and fire-
crackers delinquents. They seem like
headless chickens that don't know
what a police is supposed to do.
Dale G Mansano --- Where the
Dale G Mansano --- Rip to the guy
that lost his life.
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WEB CHAT ...from our Facebook readers
"A beautiful day
begins with a beau-
tiful mindset. When
you wake up, take
a second to think
about what a priv-
ilege it is to simply
be alive and healthy.
The moment you
start acting like life
is a blessing, I as-
sure you that it will
start to feel like one.
Time spent living is
time worth appreci-
--- Author Unknown
Joel Pompey, who is due to appear before a Port-of-Spain Magistrate today
charged with the murder of his stepson Josiah Martinez. PHOTO: ABRAHAM DIAZ
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