Tuesday, March 3, 2009

Foireign currency out of control in Trinidad and Tobago banking system.

Reprinted from Caribbean Net Newscaribbeannetnews.com
Trinidad and Tobago running out of foreign currency
Published on Tuesday, March 3, 2009
By Oscar Ramjeet Caribbean Net News Special Correspondent Email:oscar@caribbeannetnews.com
PORT OF SPAIN, Trinidad: Mounting demand for United States dollars has caused a foreign currency shortage in Trinidad and Tobago. The Trinidad Express reported that businesspeople across Trinidad and Tobago have been struggling to access US dollars and some are now worried that they may not be able to restock their shelves because they can't pay for the imported goods from North America and Asia. The Central Bank has had to intervene and pump hundreds of millions of dollars into the market to meet the demand for "greenbacks" from the local business community. Scotiabank's managing director Richard Young has confirmed the shortage of currency. He attributed the increased demand for US dollars to "some capital movements of currency" whereby customers and investors were extracting US currency from the local system in the past months. In an interview with the Express, Young suggested that a number of people were attempting to take advantage of global meltdown and particularly how it affected property prices in the United States. "People want to take advantage of properties abroad," he said. The Central Bank has injected US dollars into the financial system five times between January and February to satisfy the demand for dollar bills. In total, the Bank has pumped in US$280 million in the past two months to satisfy the need for US cash, Scotiabank data indicated last week. There was also speculation by Young that multinational energy producers operating in Trinidad and Tobago had been contributing reduced energy taxes to the state because of the plummeting crude oil prices, which had resulted in fewer US dollars getting into the financial system. A financial source told the Express that one commercial bank had business customers that needed as much as US40 million last week and could not get the required cash. Energy companies have slowed production and this may have impacted on the government's tax intake, he suggested.
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