Forex imbalance continues

RBC managing director Gretchen Camacho-Mohammed on Wednesday said there "continues to be an imbalance between the supply and demand for foreign exchange (forex) in the system."

Her comment comes two days after Tabaquite MP Dr Surujrattan Rambachan claimed there was unfairness in the distribution of forex by commercial banks.

Rambachan made his complaint on the basis of a notice issued by state bank First Citizens (FCB) saying that since last Friday, limits would be applied to all foreign exchange to be sold to individuals at its Piarco branch. FCB customers will be allowed a maximum of $300; citizens who are not FCB customers receive a maximum of $150 and non-nationals get a maximum of $50.

Gretchen-Mohammed said, "The forex demand is dynamic and generally increases year-over-year."

Thie affects commercial clients and individual customers who have large needs for foreign currency. The business demand is typically driven by a need to settle outstanding invoices to foreign suppliers.

On the individual side, the forex demand varies. The individual demand includes forex for vacation, education and medical needs, depending on the need and the time of the year.

"Due to the imbalance between supply and demand, a few years ago RBC implemented a strict daily limit at US$200 or equivalent, per debit card on international ATM withdrawals," Camacho-Mohammed said.

Individual and business clients who need more forex are asked to visit an RBC branch, where a representative will work with them to determine what solutions might be available, based on currency availability.

Camacho-Mohammed said, "RBC continues to actively support the international needs of our clients through the range of products and services we offer. This includes electronic transfer of funds, establishment of letters of credit, issuing internationally accepted credit cards, foreign currency loans, and foreign exchange trading.

In response to Rambachan's claims, FCB said the notification is part of the normal adjustment to the supply of forex to its customers and non-customers at its bureau de change at Piarco Airport during the vacation period of increased demand. FCB said these limits would remain in force until further notice.

In April, Finance Minister Colm Imbert said TT's net reserves are US$7.5 billion, or eight months’ import cover and this was well beyond the international standard. In 1993, net reserves were just about US$200 million, he said, and, with the boom in oil and gas prices in the early 2000s, peaked in 2007 at US$13.7 billion. Imbert said TT has been able to defend its exchange rate for the last 26 years and will continue to do so beyond the next decade.