BoG has enough reserves to stabilise foreign currency market, if necessary

– GS Jagdeo tells media

The government is carefully monitoring the foreign exchange ensuring there is a stable exchange rate and balancing Guyana’s currency’s value to prevent excessive appreciation or depreciation.

According to the General Secretary of the People’s Progressive Party (PPP), an appreciate would risk the ‘Dutch disease’ phenomenon, while a significant depreciation could destabilise the economy.

He went on to explain that over recent years, the exchange has fluctuated between $212 and $222, with adjustments when Guyana’s central bank – the Bank of Guyana – injects foreign currency into the market.

“But we believe that the floor of foreign currency in aggregate sense is matching the demand in aggregate sense but (what) you have is a balkanized market. And that’s what we try to help with from time to time,” he informed reporters.

Dr Jagdeo addressed the management of the foreign currency market in response to questions posed by members of the media at his Wednesday’s press conference at Freedom House in Georgetown.

The increase in economic activities, particularly capital investments are key factors that have led to an increased in demand for foreign currency. Jagdeo pointed out that these investments are real transactions and essential for the economy’s expansion.

Looking forward, he noted the Christmas season can push up demand as businesses procure goods and make payments. Nonetheless, the Bank of Guyana has capacity to intervene should there be a significant demand. “We have enough reserves to do that, but it has to be not when one person moves the system…But when we assess that the aggregate demand is exceeding aggregate supply to the market; that’s when there is cause for intervention,” he noted, emphasising the bank’s continued role in stabilising the market, if needed.