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CCNTV6
  • 1 year ago
Where is the forex going? It's the question being asked by the business community and members of the public, who continue to encounter challenges in acquiring same. One economist is now calling for the government to step in.
Transcript
00:00With Scotiabank announcing reduced forex limits for both its debit and credit card
00:05mere weeks before the busiest shopping period of the year, tensions are
00:10heightening across the country. Indeed we have to also consider the possibility
00:14that other banks may also be considering to take similar steps. Many people are of
00:19the view that commercial banks are hoarding the foreign reserves. Economist
00:23Valmiki Arjun notes that the trend in past years points to a surplus in
00:28foreign reserves. At the end of 2022, 2021 and 2020, they actually had a surplus
00:35of 248 million, 392 million and 86 million respectively in those three
00:41years, leaving a total surplus in that three-year period of 726 million US
00:48dollars. In fact in the last 10 years, banks held a surplus of about 1.25
00:53billion. Yet still consumers struggle to access the forex needed to conduct their
00:58business, begging the question where the forex gone? Arjun believes it's high
01:05time the government step in to protect the interests of the public. It's highly
01:09possible that they're building up foreign exchange to use for their
01:13proprietary portfolios and investing in foreign financial assets like for
01:18example US Treasuries, which is resulting in them having an excess of US assets
01:22over US liabilities. Now this practice of course naturally ties up US dollar funds.
01:28Which instead could have been allotted to the general public and business
01:32sectors. Now this raises an important policy and regulatory question. Should
01:37regulation be implemented to limit the extent to which banks can hold foreign
01:42currency assets in excess of the foreign currency deposit liabilities? Now this
01:46could be a temporary measure, at least until our forex earnings from exports
01:52return to a high level. Arjun warns that if the situation is not addressed
01:56expeditiously, the economy will suffer. The finance minister appeared to respond
02:01to the economist's call for legislative intervention saying via Twitter quote
02:06the request by the media and some businessmen that the Minister of Finance
02:11regulate access to forex distributed by the private commercial banking sector is
02:15interesting. This could be construed by other stakeholders as political
02:20interference. So I will look at this very carefully end quote. TV6 News
02:25attempted to get a response from the Bankers Association and also called the
02:30finance minister's phone. However both attempts proved futile.
02:34Renessa Cutting, TV6 News
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