The pressure on the foreign exchange market is being relieved as the government has decided to make foreign exchange available to importers of essential goods. In a press release, the Ministry of Finance & Planning said that the currency intervention will be in place until the repatriation and retention of foreign currency from exports works well. The official exchange rate today is SRD 27.27 for the US dollar and SRD 26.24 for the euro.
The government has decided to make foreign currency available to stabilize the exchange rate which has been on the rise in recent weeks. Today the Ministry of Finance and Planning has made agreements with the oil companies and importers of medicines and necessary basic goods.
Minister Achaibersing said sufficient dollars will be made available, at least as much as at the beginning of last year when foreign currency was also released for these imports. That ‘retention scheme’ worked well at the time.
When the exchange rate was brought into line with the market in June 2021, the IMF agreed with the CBvS not to carry out any more currency interventions; instead, the IMF made open market operations – the so-called OMOs – a precondition; it now appears that the OMOs do not work properly.
The government has decided to reinstate its own successful method from early 2021, until things are structurally in order. This measure applies until the statutory rules for the repatriation and retention of foreign currency from exports are working properly again. This policy has also been successful in the past, but has been neglected.
Oil companies are pleased and welcome a solution; the allocation has worked in the past, and there is confidence that it will lead to stability in the market, which is important for businesses and for consumers. The first amounts are already available this week.
A local State Bank, which has a solid correspondent bank abroad and the infrastructure to carry out this smoothly, is involved in the implementation of the provision. The management said that it is in everyone’s interest that the economy, and especially rates and prices, calm down, and all parties must participate in a smooth process.