For 2024, the top-of-mind is­sue for many busi­ness­peo­ple and groups was the for­eign ex­change crunch, which has wors­ened this year.

While T&T has been ex­pe­ri­enc­ing for­eign ex­change short­ages since 2014, the is­sue is an un­de­ni­able strain on the abil­i­ty of many to do busi­ness.

The busi­ness com­mu­ni­ty, es­pe­cial­ly the small and medi­um sized busi­ness­es (SMEs), felt the brunt as they were gen­er­al­ly on­ly able to ac­cess US$200 or $500 per day.

While busi­ness­es were grap­pling with the ef­fects of the scarce for­eign ex­change, Sco­tia­bank and RBC Cana­da cut their US-dol­lar cred­it card spend­ing lim­it.

Sco­tia­bank said hold­ers of the Aero Mas­ter­card Black would on­ly be able to spend a max­i­mum of US$5,000 a month. That came in­to ef­fect on De­cem­ber 1. Sco­tia­bank’s oth­er per­son­al cards have a US$2,000 lim­it.

RBC cred­it card hold­ers saw their month­ly lim­it re­duced from $41,000 to $14,000 in forex equiv­a­lent, which al­so took ef­fect on De­cem­ber 1.

This rep­re­sents a re­duc­tion from US$6,000 to about US$2,000. This rep­re­sents a 66 per cent de­crease.

Re­pub­lic Bank made sim­i­lar changes to its forex lim­its on cred­it cards in Sep­tem­ber 2023. Their cus­tomers could ac­cess a max­i­mum of US$5,000 per state­ment cy­cle.

Econ­o­mist Dr Vaalmik­ki Ar­joon said lo­cal bank cus­tomers should ex­pect fur­ther re­duc­tions in the fu­ture, es­pe­cial­ly if the de­mand for forex con­tin­ues to out­strip sup­ply. He warned the low­ered US-dol­lar spend­ing lim­its on cred­it cards could re­sult in high­er op­er­at­ing costs for SMEs, in par­tic­u­lar, and that those costs are like­ly to be passed on to cus­tomers, es­pe­cial­ly those that pa­tro­n­ise busi­ness­es that are im­port-heavy.

In Oc­to­ber, Ra­j­nanan Ram­saran, founder of Ram­saran Di­ary wrote to the Cen­tral Bank Gov­er­nor, the Au­di­tor Gen­er­al, and the In­ter­na­tion­al Mon­e­tary Fund (IMF) out­lin­ing the lack of in­for­ma­tion on the dis­tri­b­u­tion of for­eign ex­change.

In his let­ter to Cen­tral Bank Gov­er­nor Dr Alvin Hi­laire, Ram­saran com­plained about the min­istry’s re­sponse to his re­quest for in­for­ma­tion.

Ram­saran said he was told the doc­u­ments could not be sup­plied be­cause they “do not ex­ist.”

Min­is­ter of Fi­nance, Colm Im­bert, in a re­lease a few days lat­er, said the for­eign ex­change win­dow opened by the Ex­im Bank for whole­sale im­porters of ba­sic foods and phar­ma­ceu­ti­cals dur­ing the COVID-19 pan­dem­ic, was a tem­po­rary ini­tia­tive.

Im­bert said, “The ad­di­tion of a sec­ond forex win­dow at the Ex­im Bank for es­sen­tial im­ports dur­ing the COVID-19 pan­dem­ic can­not cre­ate a sit­u­a­tion where, four years lat­er, the Gov­ern­ment is be­ing held li­able by cer­tain pri­vate sec­tor busi­ness­men for the items they or­dered and re­ceived with­out pay­ing for them.

On Oc­to­ber 30, Cen­tral Bank Gov­er­nor Dr. Alvin Hi­laire told Guardian Me­dia that there is an im­bal­ance in this coun­try’s for­eign ex­change mar­ket, but the bank is do­ing its best to meet the de­mands.

“What we have been do­ing to keep calm in the mar­ket is to sell ap­prox­i­mate­ly US$50 mil­lion every two weeks which is not triv­ial. This year we sold over US$1 bil­lion on the mar­ket.

“We al­so sup­ple­ment that by pro­vid­ing a liq­uid­i­ty guar­an­tee fa­cil­i­ty to the com­mer­cial banks. So, in oth­er words, when the banks are ex­tend­ing them­selves a lot in trad­ing, they can get a spe­cial amount, with­in the lim­its of the Cen­tral Bank. Last year, it was about US$92 mil­lion that banks got in the ex­tra in­ter­ven­tion from the Cen­tral Bank and this year so far it is about US$75 mil­lion,” Hi­laire ex­plained.

As the forex crunch con­tin­ued, Min­is­ter of Fi­nance, Colm Im­bert, called a news con­fer­ence in No­vem­ber and an­nounced plans to con­sult with stake­hold­ers on chang­ing the method for al­lo­cat­ing for­eign ex­change. The dis­cus­sions will out­line the path to­ward achiev­ing eq­ui­table dis­tri­b­u­tion.

For 25 years, an “ho­n­our sys­tem” has been in place for the dis­tri­b­u­tion of for­eign ex­change by com­mer­cial banks in T&T. How­ev­er, with busi­ness­es clam­our­ing for more forex to be made avail­able, Im­bert has an­nounced a pos­si­ble plan to “reg­u­larise” how this is done.

In ex­plain­ing the “ho­n­our sys­tem,” Im­bert said, “It is ex­pect­ed that banks would ex­er­cise re­spon­si­bil­i­ty, eq­ui­ty, jus­tice, and all that sort of thing in the dis­tri­b­u­tion. They can go to the oth­er ex­treme, which they have not done yet, where they can par­tic­u­larise, for ex­am­ple, that a per­cent­age of this US $100 mil­lion that is put in every month should go to small and medi­um en­ter­pris­es, should go to ed­u­ca­tion, should go to med­ical ex­pens­es, should go to trav­el, should go to im­ports for man­u­fac­tur­ing,” the min­is­ter ex­plained.

Guardian Me­dia un­der­stands that Im­bert met with T&T Cham­ber and In­dus­try Com­merce in late No­vem­ber and the Bankers As­so­ci­a­tion of T&T (BATT) in De­cem­ber. The out­come of those meet­ings was not made forth­com­ing as one of the ex­ec­u­tives who at­tend­ed one of the meet­ings said the min­is­ter would in­di­cate to the me­dia on the way for­ward, when he gets the op­por­tu­ni­ty.

As a re­sult of the short­age, the black mar­ket has be­come more pop­u­lar for busi­ness peo­ple who need to ac­cess large sums of forex.

A Guardian Me­dia team vis­it­ed a few stores in Port of Spain in De­cem­ber to en­quire how much US can be ob­tained.

One store on Char­lotte Street in­di­cat­ed that the busi­ness own­er did not have any more US cur­ren­cy to dis­pense at the time. He in­di­cat­ed that the fol­low­ing day, the much-need­ed for­eign ex­change would be re­plen­ished.

Asked if it was pos­si­ble to get US$1,000, the own­er said it was doable de­pend­ing on how much he was get­ting from his sup­pli­er.

At an­oth­er re­tail store on Fred­er­ick Street, the own­er of an­oth­er busi­ness was asked if he sells US dol­lars and if it was be­ing sold for $7.50. The busi­ness­man said he had sold the US, but not for $7.50.

“For­eign ex­change is very crit­i­cal right now. The black mar­ket rate is $8 to US$1. How much are you look­ing for? I can sell you US$500 for TT$4,000,and if you want US$1,000, I will give you $8 to $1, which will be $8,000.”

Many econ­o­mists and busi­ness­peo­ple are hope­ful that for the new year, for­eign ex­change will be eas­i­er to ac­cess.