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Financial News

Sep 2009 Financial News

No foreign exchange crisis, says Browne

Sep 30, 2009

There is no foreign exchange crisis.

There is ample evidence that Trinidad and Tobago will be able to meet all its requirements, Minister in the Ministry of Finance Mariano Browne said yesterday.

Browne admitted that there has been "some slippage"-$1 billion-in total foreign exchange reserves held by the Central Bank and the commercial banking sector.

He said the reserves held by the commercial banks were down approximately $300 million and those held by the Central Bank were also down.

Responding to a motion on the adjournment piloted by UNC Senator Wade Mark, who claimed there was a foreign exchange crisis, Browne said: "We will get in the market place temporary blips which are reminiscent of demand and supply. It is very much like the supply of tomatoes and cucumbers. Every once in the while, you run into little blips and it demonstrates itself in terms of the price. The purchase of US dollars is no different."

He said Trinidad and Tobago still had 11 months of import cover.

He said the foreign exchange reserves which have been rising steadily since 2004, stood at December 31, 2008-$9.8 billion held by the Central Bank and a total figure of $11.3 billion, if one included the commercial banking sector.

As at May 30, 2009 the reserves stood at $8.9 billion held by the Central Bank and a total of $10.2 billion if the amount held by the commercial banking sector was included.

This total figure, he noted, did not include the Unit Trust Corporation.

Browne said in terms of the net balance of trade, Trinidad and Tobago continues to earn more than it spends.

He said if there was a shortage of foreign exchange there would have been a black market rate or alternatively there would have been a wide disparity in the rate that is quoted (on a day-to-day basis).

"The fact that it is varying within a number of cents means that what we have is some trade changes and demand changes," he said.

Browne said part of the reason for this was that the international finance crunch meant that many businesses abroad did not enjoy the same level of banking facilities or banking support as they did before August 2008.

"And that would translate as a change in the terms of trade. So whereas you would have gotten 90 days credit, 60 days credit, it means that the foreign supplier is asking to be paid earlier and that has led to some tighten in the foreign exchange market," he said.

Ria Taitt Political Editor
Trinidad Express
Wednesday, September 30th 2009