Guyana: Exchange rate for US dollar climbs… due to various causes

US Dollar Exchange Rate Rises

Something is happening to the US dollar on the local market.
In recent weeks, the exchange rates have been climbing.
At the banks, the buying rate for notes was between $207- $208 for US$1, the selling rate was $210 and $211. On the streets, the rates were much higher.

There are reports that it is sold much higher on the streets because of a shortage in US Dollar cash.

Last Friday (February 8, 2019), Governor of Bank of Guyana, Dr. Gobind Ganga, acknowledged that there is a shortage of US currency.     

At Demerara Bank, the rates for transfers on Friday was buying $208 and selling $213.
At GBTI, it was $208 and $211, according to its website.

click to enlarge

At L. Mahabeer and Son Cambio, on King Street, one of the more prominent of the money exchange operations, US cash was being bought for $216 and sold for $219.

The local US cash supply had been badly affected in 2016 after Bank of America announced it was ending its relations as a correspondent bank to Guyana.

The move had come as the US banking giant cut its risks in the Caribbean amid ongoing concerns over anti-money laundering activities.

Low profitability, concerns about reputations, and increased Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) scrutiny have all contributed to concerns about de-risking.

The climbing US rate has not been helped by a contraction of the underground economy due to a tightening up by authorities.
The US’ Drug Enforcement Administration (DEA) opened its office in early 2016 with a number of busts highlighting what has been described as success for them.

However, the absence of cash from the drug transactions has deeply impacted the situation, affecting the rates.

However, another side of the story of what is leading to the cash situation is emerging.

According to cambio and street operators, there has been a steady demand from embassies and other companies which are paying workers in US currency.

There is growing evidence too, that the thousands of US dollars coming here from Cuban traders have not been making it to the normal system.

It was reported that 1,000 Cuban are coming here to shop weekly. That translates to at least US$4M monthly coming from that Spanish-speaking country in trade.

They come with mainly US dollars. The monies are not really going to the cambios or the banks.

Rather, it has reportedly ended up in the Chinese stores that the Cubans shop at.
According to officials, there have been warnings for the Chinese not to accept US but it appears that Central Bank and other authorities are unwilling to clamp down.

The Cubans have been utilizing the no-visa arrangements here, while staying in guest houses, eating and using transportation.

The cash from the trade is quietly gathered up and shipped out, other than legal means, to Suriname and other countries, Kaieteur News has been told.

At least one large Chinese trader has been named as the business that has been helping to sop up the US dollars.

Trinidad companies operating here have also been known to have been aggressively buying up the US currency, as there is a shortage in Trinidad as well.

The rise in the US dollars is deeply worrying as it ultimately affects the prices of imported goods.

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Comments

  • Trevor  On February 11, 2019 at 8:13 pm

    US dollar is at $220 to one today.
    I thought that oil money would appreciate a currency, not devalue it?

  • guyaneseonline  On February 13, 2019 at 5:57 am

    No foreign exchange shortage but fewer US notes in circulation
    Posted by: Denis Chabrol in Demerara Waves – February 12, 2019

    The Governor of the Bank of Guyana, Dr. Gobin Ganga, has assured that there is no shortage of foreign currency to transact international business such as wire transfers, but there are fewer United States (US) notes circulating at cambios and commercial banks partly because the increasing number of foreign workers are buying up the bills.
    “There is an increase in demand with more foreign workers here,” he said.
    Ganga was contacted against the background of the selling rate for the US dollar increasing from GYD$213.00 to GYD$217.00 in the last few weeks.
    The Central Bank Governor acknowledged that “there is foreign exchange currency shortage” as far as notes were concerned, causing a number of commercial banks and cambios to knock at the Bank of Guyana’s doors for US dollars.
    He said the shortage was not due to reduced earnings from major exports – bauxite, gold, rice and sugar – but because the Bank of America, which was responsible for transporting American dollars to Guyana, has pulled out. “We are getting all of that. There is no shortage of foreign exchange. The shortage is only the actual notes. As a matter of fact, the rates have been stable and even somewhat appreciated so there is no shortage of foreign exchange in the system. It is just that there is a shortage of notes,” Ganga said.
    At the same time, he said foreign workers from the Caribbean and extra-regionally have been buying notes to remit or take with them.
    “As you know, when people buy notes and they take the notes out, those notes are not coming back in and (it) is not like we are dealing with wire transfers. These are notes when they go you have to replenish them but we are making efforts to get more notes through another supplier,” Ganga told Demerara Waves Online News.
    At least one privately-owned company, Muneshwer’s Shipping, has asked its customers to pay in US dollars because the shortage has caused it to be unable to pay the Maersk shipping line, SeaLand. If customers do not have US dollars, they were told to pay in Guyana dollars at a rate of GYD$230 = U$1.00 instead of GYD$220.
    Dating back to November 2018, the Guyana Revenue Authority (GRA) has been using an exchange rate of GYD$208.50.
    The Bank of Guyana Governor said the shortage has nothing to do with fewer Cubans coming to Guyana and were instead going to Panama, Haiti and Suriname.

  • Trevor  On February 13, 2019 at 4:39 pm

    “More foreign workers”

    Which means that Exxon will hire Americans who get paid in US salaries, driving up the cost of living for us.

    Exxon paid 10 times the going rate for land, and I’ve heard that an American company affiliated with oil paid a businessman almost one million US dollars for a piece of land which only could build a house lot.

    Jagdeo’s clientele at Pradoville were paying one million US dollars for complete mansions, but American oil giants are paying over a millz for the land, bare land.

    But when I checked my brother’s paycheque, he is still receiving GY$67,885 net pay, which is barely US$350.

    How the **** are we going to afford house lots at the rate these wealthy foreigners are scooping up our lands? Why isn’t there a law to ban foreign companies from buying up huge parcels of land for speculation?

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