Bank of Guyana
GEORGETOWN, Guyana -- At the opening of the local currency trading market on Friday morning in Guyana, the value of the Barbados dollar and the Trinidad dollar lost around 0.09% and 1.2% of their respective values against the Guyana dollar within the first hour of trading.
Both currencies began to nosedive domestically after the Bank of Guyana reacted to an increased trend that showed that traders from both Caribbean states were dumping their currencies into the Guyanese financial system in exchange for hard to get US currency.
So with a noticeable inbound increase of both Barbados and Trinidad dollars in its coffers, and an ever expanding outflow of the US currency, the Bank of Guyana made a decision on Thursday to stop buying either currency from local commercial banks or private licensed currency traders.
As a result, local banks and traders are no longer accepting the Barbados or Trinidad dollar, which has now created a slowly increasing glut of both currencies that may eventually become stuck in the hands of many businesses and travellers who would eventually become desperate to exchange both currencies for lower than its international market value if necessary.
And while this may be good news for black market currency traders or hoarders, it will be bad news for both countries’ economies, since businesses from Barbados and Trinidad will only be able to buy from Guyana with the US dollar, which is already hard to get in heavy trading quantities from local banks in Trinidad or Barbados.
As such, financial experts are of the view that a three-way trade contraction can be expected, as Guyana would end up exporting less to both countries, which will in turn see those countries exporting more but for a lesser value, since Guyanese businesses are still able to pay for goods and services from Barbados and Trinidad with US currency.
On the other hand, industry insiders are of the view that, while Barbados and Trinidad may face a short term squeeze as a result of Guyana’s currency plug decision, it can still have some negative trading impact on Georgetown in the long term, unless all three countries can come up with a common solution before the second quarter of 2017.
Guyana remains one of the biggest regional hard currency trading partners for both countries, which often sees Guyanese businesses and importers pouring millions of US dollars into the Barbadian and Trinidadian economies.
Republished with permission of the Guyana Guardian