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  • 1 year ago
As RBC hits its personal credit card clients with a cut in their foreign exchange limit, one economist says this is only more doom and gloom for small and micro businesses hoping to earn some extra cash in time for Christmas.


Dr Vaaalmikki Arjoon says the reduced forex allocation was only a matter of time.

Transcript
00:00Another bank, RBC, has announced a 66% reduction in the foreign exchange limits for its personal
00:08and business banking credit cards.
00:10This move is effective as of December 1.
00:14A notice issued by the bank today tells its clients that credit card holders' monthly
00:19limits will be reduced from approximately $41,000 to $14,000, or from US$6,020 to US$2,058.
00:34An excerpt of the notice reads,
00:36RBC is committed to being the bank for all of you and providing optimal choices for our
00:42clients.
00:43Given the ongoing foreign currency supply constraints, we need to regularly review FX
00:48limits on our clients' credit cards while striving to balance the needs of our clients
00:53with the availability of foreign exchange supplies."
00:57RBC says the local TTDollar transactions remain unaffected and private banking clients may
01:04contact their private banker for further information.
01:07The move by RBC comes one week after Scotiabank announced plans to lower the US dollar spending
01:13cap on its credit cards.
01:16Effective as of the same date, December 1, weeks before Christmas, Scotiabank customers
01:21with personal credit cards, with the exception of the Arrow MasterCard Black, have a reduced
01:27maximum limit of US$2,000.
01:30Economist Dr. Valmiki Arjun says it was only a matter of time.
01:34The reason for this lower allocation is again because of the large mismatch between our
01:38foreign exchange demand and supply.
01:40There is persistently high foreign exchange demand and declining foreign exchange earnings
01:46largely due to the reduced energy exports.
01:49And don't be surprised if you see the other banks considering similar measures in the
01:54coming weeks.
01:55The move, he says, will lead to a sense of desperation when it comes to small and micro
02:00merchants getting their Christmas supplies in.
02:03That is going to drive another wedge in small business activities locally, particularly
02:07for those that rely on imports for their operations.
02:11Because many use their credit cards to pay for imports from suppliers.
02:15This additional cost, he says, will no doubt be passed on to consumers in the form of higher
02:19prices.
02:21Many were counting on the foreign exchange credit card allocation to import goods to
02:26sell to resell locally for Christmas.
02:29But now that they have no choice or little choice to turn to the black market, don't
02:35be surprised if we see higher prices in the shopping malls and flea markets.
02:40Dr Arjun says businesses will be forced to scale down as their profitability takes a
02:45hit.
02:46Some may even have to cut staff, leading to a further decimation of the small and micro
02:52businessmen.
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