T&T Central Bank feels foreign currency crunch

Trinidad and Tobago's business community is concerned about a shortage of foreign currency in the financial system and many business people are concerned that if it continues they won't be able to buy goods that require payment in US currency.

So far the Central Bank has intervened and pumped hundreds of millions of dollars into the system to ease the burden.

The Trinidad Express spoke with Scotiabank's managing director Richard Young, who confirmed the shortage of currency, attributing it to the increased demand for US dollars to "some capital movements". This has happened because people have been buying up US dollars in the past months.

The Central Bank has injected US280 million into the financial system for the year to satisfy demand for foreign.

Gregory Aboud, president of the Downtown Owners and Merchants Association, confirmed to the paper that businesses are under pressure. "We, like all others, are experiencing the current tightness in supply of US dollars. It is somewhat confusing given that in the first quarter, imports are significantly reduced and foreign exchange supply is usually enhanced by the 40,000 to 50,000 visitors for Carnival."

He suggested that the Central Bank should move to strengthen confidence in the financial system. "There is no doubt we might be prone to blaming capital flight and for that reason, the solid hand of the Central Bank should be placed on the 'national shoulder' in an effort to strengthen confidence and reassure the market," Aboud said.

There is speculation that the currency shortage is because of a loss of significant loss of revenue because of falling oil prices. But Energy Minister Conrad Enill has dismissed that.

"We have had this happen before and the Central bank intervenes and sells foreign exchange," he told the Express.

He said the country has ten months of US dollar import cover and that natural gas prices are still stable and high to meet Government's national budget.