As you exit the incoming immigration checkpoint at Piarco Airport the first thing you see is a cambio offering to sell United States currency at TT$7.50 to US$1.
Now, the official rate at the commercial banks is around TT$6.68 to US$1, but both cash and drafts are in very short supply and cannot nearly satisfy either the business or personal demand for United States currency.
So, what is a businessperson seeking foreign exchange to stay solvent or an individual requiring US cash for travel there to do?
The answer is obviously to purchase the necessary US funds on the burgeoning black market, which has sprung up in direct response to the low availability of US funds.
Indeed, there are many supermarkets in T&T today with signs advertising that they purchase US dollars at TT$7 to US$1.
However, Friday’s press published a warning by the Central bank that only 12 authorised dealers can sell foreign currency and anyone else caught so doing faces a fine and up to five years in jail.
Unfortunately for T&T, the above scenario clearly indicates that the authorities have lost much control of the highly-important function of allocating foreign exchange to the various competing interests.
This has now led to three effective exchange rates for US dollars as follows.
1. Commercial bank rate—between $6.66-$6.68
2. Approved cambios—$7.50
3. Black market rate—anywhere between $6.80-$8.
All of the above rattles the important confidence factor behind an economy. Anytime you see three different exchange rates in operation for any length of time it is a situation of basket case here we come. Look at our neighbour Venezuela.
I know it will cause some pain to the consumer in the short term but the “least worse” solution is to let the exchange rate float.
Gregory Wight
Diego Martin