Colm Imbert

TOOK NECESSARY STEPS: Colm Imbert

The Central Bank injected US$1.012 billion into the foreign exchange market between January and October 2021, Finance Minister Colm Imbert said on Wednesday.

Furthermore, the Government, through the Exim Bank, has provided access to a further US$524 million, which “led to a total intervention of US$1.536 billion in the forex market for the first ten months of this year”, he said.

Imbert was responding to a question from Mayaro MP Rushton Paray in the House of Representatives on the measures taken to rectify the foreign exchange shortage in time for the upcoming peak commercial periods.

Imbert said the Government monitors the market for foreign exchange on a regular basis, and takes appropriate action as and when required.

In this context, three new special-purpose windows for foreign exchange have been established by the Government in recent years.

In the first instance, a window has been made available at the Central Bank for State enterprises to meet some of their forex demands to ensure the supply of essential goods and services to the population is not interrupted.

This provides forex for entities such as WASA, T&TEC, TSTT, Paria Fuel Trading and so on.

In addition, two other special purpose forex windows have been established at the Exim Bank for the importation of essential goods, such as basic foods and pharmaceuticals and the other for the importation by export manufacturers of raw materials and equipment, the minister said.

These three facilities provided forex on a targeted and structured basis, and are outside of and in addition to regular injections of forex by the Central Bank into the commercial banking system.

Imbert said it should be noted that in accordance with Sections 5 and 6 of the Exchange Control Act, the Central Bank has adopted the role of maintaining orderly conduct in, and stability of, the domestic market.

To achieve this goal, the bank routinely sells foreign exchange to authorised dealers in the market to meet excess demand by covering the net sales gap.

Over the period January to October 2021, the net sales gap was US$843.1 million, representing an 11.9 per cent decline from the previous period, the minister said.

As such, the Central Bank sales of US$1.012 billion to authorised dealers supported the market over the reference period.

“This intervention enabled authorised dealers to meet demand as foreign currency sales by authorised dealers to the public rose by 6.5 per cent to $3,992.9 million over the January-to-October period relative to the same period in the prior year.

“Further, the Central Bank engages in frequent dialogue with authorised dealers with a view to gaining a better understanding of emerging developments in the forex market and improving the effectiveness of its intervention programme,” Imbert said.

He said access to forex through the three US dollar facilities set up at the Exim Bank where State enterprises, importers and exporters of essential goods can access forex, grew from US$209 million in 2017 to US$575 million in 2020.

He said during January to October 2021, access to these facilities totalled US$524 million, which led to the total intervention of US$1.536 billion in the forex market for the first ten months of this year.

Asked why small and medium-sized businesses and the non-business sector have difficulty getting forex from the banks, Imbert said the Government continues to monitor the market and to make forex available on a regular basis.

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