It is amazing how so many learned individuals could be making such illogical, damaging statements around our foreign exchange situation. Continuing down this road may lead to irreparable damage to our economic system, and could be considered highly reckless and irresponsible.
Let us look at the facts:
(1) On Tuesday February 4th, 2014 Scott Forbes of San Juan published a letter to the editor titled “Shortage of US$ currency hurting business”.
(2) On Friday February 7th, 2014, Mary King published a letter to the editor titled ” ‘Shortage’ A call for diversification of foreign exchange earners”
(3) On Thursday February 20th, 2014, Inshan Ishmael published a letter to editor titled “Still pressure for foreign exchange”
I just want to reiterate these letters were published in February 2014.
Now look at the recent rumblings being voiced on the new system for allocating foreign exchange that was launched on April 1st, 2014 :
(1) On May 20th, 2014 the PNM held a press conference in which it was calling on Government to stop the new system of foreign currency allocation, which they claim is leading to the auctioning of US dollars, the creation of a black market, and which would eventually lead to a devaluation of the Trinidad and Tobago dollar.
(2) Noted economists such as Dr. Terrence Farrell and Dr. Ronald Ramkissoon, has contributed to the debate within the last week, raising questions surrounding the system, and insinuating that this may be the cause of the apparent “shortage”.
(3) On Thursday June 5th, 2014 at a public meeting Rowley was predicting there will soon be an inadequate supply of drugs at hospitals due to the foreign exchange shortage.
Here is my major point, how could a system that was launch April 1st, 2014 be the root cause for something that was occurring since January 2014? Clearly this cannot be the case, and the recent rumblings are at best misinformed and may be perceived to have ulterior intentions.
Now, let us analyse this situation closely using simple logic. The evidence points to no shortage of foreign exchange in the country, and this is an indisputable fact supported by data. The Central Bank’s role to ensure that supply meets demand is well established, and they are meeting their responsibility. Banks and other agencies act as retailers of foreign currency, so if the supply is there, and the demand is there, however, there are shortages occurring in the system, I ask you, where does the problem lie? The Bankers Association of Trinidad and Tobago (BATT) is not being open with the population. What I believe the nation would like is a report from the BATT on the various sources of demand for foreign exchange, and how this is being satisfied by them. Is it the increase in online purchasing activity causing the shortage? Are there other factors? We just do not know. The population is owed this, as if there is a change in the business landscape, we need to make adjustments to facilitate these changes. Supply side policies should not be our only panacea to this problem, we need to understand the changing patterns of our foreign exchange demand. Mr. Larry Nath, as head of BATT, don’t let this be your second lapse!