Jul 2016 Financial News

Bahamas denies plans to devalue local currency

Jul 25, 2016

NASSAU—The Central Bank of the Bahamas (CBB) has denied reports of a possible devaluation of the local currency insisting there “are also no existing or emerging pressures that would precipitate the forced abandonment of the fixed exchange rate regime.”

In a statement, the CBB said it wanted to assure the public that “contrary to speculation” in the local media “there is no imminent or medium-term threat of devaluation of the Bahaman dollar”.

It said that “adequate support and mechanisms remain in place to protect the value of the currency, despite conjectures about the impact of economic growth, fiscal consolidation prospects or governance institutions.

“The Bahamian Dollar’s value continues to be supported by the foreign reserve holdings of the Central Bank and the tools at the Bank’s disposal to regulate the demand for foreign exchange.

Among those warning of a possible devaluation of the dollar which is pegged at one to one with the US dollar is Robert Myers, the former chairman of the Chamber of Commerce and now a member of the Organisation for Responsible Government.

Myers told the local media that the country is “rudderless” with debate more on “shiny-object issues” rather than on the real issues confronting the Caribbean Community (Caricom) country. He said “devaluation was a question of when, it is not a question of if.”

But in its statement, the Central Bank of the Bahamas said that a predicate to any pressure on the currency is for the foreign reserves to be threatened with depletion. But it noted that as of Thursday night, the Central Bank’s holdings of international reserves are still in excess of US$1 “well above the international benchmark of 12 weeks of total import cover, which reflects stronger reserves growth in the first half of 2016 than in the corresponding period of 2015.

The CBB said that the Bahamian public continues to have comfortable access to foreign exchange to fund their external transactions.

“In the present circumstances, the Bank remains well equipped to defend the Bahamian dollar and any forced float or devaluation would not benefit the economy. It is well within The Bahamas’ means of being avoided over the medium-term,” the CBB added.

Source:
Trinidad Guardian, A15
Saturday July 23, 2016