Apr 2004 Financial News

Central Bank injects US: TT dollar rises

Apr 19, 2004

By CURTIS RAMPERSAD
Friday, April 16th 2004

THE Trinidad and Tobago dollar appreciated in value against US currency for the first time yesterday after several months of continued tightness in the foreign exchange market.

The Central Bank injected US$40 million into the financial system on Tuesday.

Along with regular conversions of currency by large companies, this prompted the appreciation of the TT dollar in comparison with the US greenback.

For many months, US/TT dollar trading has been firm at US$1 to TT$6.2999.

Yesterday the TT dollar rate appreciated to $6.2899, indicating more availability of US currency in the financial system.

The cash buying price for US dollars remained at TT$6.

Bankers' Association president Richard Young confirmed the Central Bank injection of funds yesterday, adding that it helped with flows of currency into the system.

What this means is that, "first of all, the injection provides supply" of US cash, Young told the Express in a telephone interview.

He also confirmed that demand had been tight for the past two to three months and there was still some demand for US dollars.

It is expected that the Central Bank would inject another quantity of US currency into the system next week, Young said.

Support by the Central Bank for the domestic foreign exchange market largely offset imbalances between supply and demand last year and left the exchange rate relatively stable for most of 2003.

In its Monetary Policy Report of March 2004, the bank noted the intermittent periods of tightness in the foreign exchange market throughout most of 2003.

This was largely associated with high demand to fund asset purchases and foreign investments by domestic companies in regional economies.

Sales of foreign cash to the public expanded 13 per cent to US$2.625 billion while purchases of foreign exchange were US$2.070 billion.

This resulted in a gap of US$555 million and the Central Bank had to sell US$505 million to the banking system in 2003 to keep the rate stable.

Source: Trinidad Express
http://www.trinidadexpress.com/index.pl/article_business?id=22956268