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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