The for­eign ex­change crunch is get­ting worse by the week and many busi­ness­es have had to turn to the black mar­ket.

While com­mer­cial banks in down­town Port-of-Spain are sell­ing mem­bers of the pub­lic and some busi­ness own­ers US$200 on a good day, at stores a stone’s throw away, one can pur­chase up to US$3,000 for ei­ther at a price of be­tween $7.50 and $9 for US$1.

The Sun­day Busi­ness Guardian vis­it­ed a few stores last week to in­quire how much US can be ob­tained.

While there are no signs in­di­cat­ing, who is sell­ing US dol­lars, as the black mar­ket is il­le­gal, it was through luck and chance find­ing the re­tail out­lets that are sell­ing.

One store on Char­lotte Street in­di­cat­ed that they usu­al­ly sell $7.50 for US$1, but at the time, which was 2:15 pm last Wednes­day, the busi­ness own­er did not have any more US to dis­pense. He in­di­cat­ed that the fol­low­ing day there would be a re­plen­ish­ment of the much-need­ed for­eign ex­change.

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

Across at an­oth­er re­tail store on Fred­er­ick Street, the own­er of an­oth­er busi­ness was asked if he sells the US and if it was be­ing sold for $7.50. The busi­ness­man said he did sell 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 $4,000 and if you want US$1,000 I will give you $8 to$1 and that will be $8,000.”

Ques­tioned on whether the fol­low­ing day US$2,000 or US$3,000 would have been pos­si­ble to pur­chase, the busi­ness own­er said “Yes, once you walk with the TT dol­lars the trans­ac­tion would be ful­filled.”

The Sun­day Busi­ness vis­it­ed oth­er es­tab­lish­ments that peo­ple said were sell­ing the US dol­lar, but some were very scep­ti­cal to say yes, and on­ly said “We ac­cept US cur­ren­cy but do not sell. You can try the com­mer­cial banks.”

A Guardian team went to a pop­u­lar re­tail store on Hen­ry Street and asked whether US$500 was avail­able for pur­chase. The cashier was about to re­spond in the pos­i­tive, but re­ceived a look from her boss and she then said no.

Up­on fur­ther in­ves­ti­ga­tion, the Sun­day Busi­ness Guardian asked a busi­ness own­er whether it was true a pop­u­lar re­tail store sells US dol­lars, she said, “They do but not to peo­ple who just walk off the street ask­ing for US. You have to be rec­om­mend­ed by some­one, or the per­son who they know has to walk in with you to ob­tain the US. They know me, so I was able to get US$50,000 last week to bring in my goods. Re­mem­ber sell­ing on the black mar­ket is il­le­gal so you have to be cau­tious about who you are trans­act­ing this type of busi­ness with.”

Delv­ing in­to oth­er ar­eas in Trinidad where busi­ness­es get their US on the black mar­ket, one busi­ness own­er said the black mar­ket is thriv­ing be­cause com­pa­nies that earn US dol­lars sell it on the black mar­ket for $7 to US$1 as it is more eco­nom­i­cal than the com­mer­cial banks.

“With the com­mer­cial banks, they are sell­ing you for $6.20. How does that make sense? When a busi­ness can sell it for $8 or $9 and make a bet­ter prof­it. I keep say­ing the banks need to have at­trac­tive rates and if that hap­pens you would have less of the black mar­kets. I agree with the auc­tion rate in­stead of the fixed rate that the banks want to im­pose on you,” said one clued-in busi­ness­man.

“I know of a com­pa­ny that gets US$100,000 a month from a sup­pli­er on the black mar­ket, as the banks on­ly want to give the own­er US$1,000. The re­al­i­ty is that the Gov­ern­ment does not want to fix this is­sue but is try­ing to paci­fy the pub­lic by say­ing it would meet with stake­hold­ers. That’s on­ly be­cause busi­ness­es are cry­ing out on the is­sue,” the busi­ness­man ex­plained.

A busi­ness­man from the South said he ob­tains his US cur­ren­cy from T&T com­pa­nies who have busi­ness­es in Guyana.

“They sell me $8 for one US$1. On a month­ly ba­sis, I usu­al­ly buy US$70,000 from a well-known com­pa­ny and this en­ables them to pay their work­ers in this coun­try TT dol­lars. The banks are not be­ing fair. And I am of the be­lief that they want to squeeze the SMEs out of the sys­tem.”

He said that the cur­rent sit­u­a­tion can­not con­tin­ue, as every month SMEs have to be look­ing for US dol­lars on the black mar­ket and what hap­pens when a busi­ness pays $8 for US$1, the price of goods at their var­i­ous stores will go up and the con­sumers will feel the pinch,” he lament­ed.

An­oth­er busi­ness own­er in the East said due to the lack of for­eign ex­change at the banks, she gets forex from three peo­ple as the amount of she needs is quite a lot.

“For my busi­ness to run prop­er­ly every month and be able to pay my staff I need US$250,000 a month, due to the na­ture of my busi­ness. On­ly a few peo­ple on the black mar­ket can get those huge amounts.”

Pressed fur­ther as to how these black-mar­ket sup­pli­ers are able to ac­quire this amount of US, the busi­ness own­er said “I re­al­ly can­not di­vulge that kind of in­for­ma­tion. We have to be care­ful about what we are say­ing about these sup­pli­ers as the black mar­ket is il­le­gal and we must pro­tect them, as they are keep­ing our busi­ness­es alive. Let’s al­so be re­al, who wants the black mar­ket to stop... it’s a very lu­cra­tive busi­ness,” she stressed.

Last week, econ­o­mist Dr Vaalmik­ki Ar­joon in a Guardian me­dia ar­ti­cle said the black mar­ket has in­ten­si­fied in the last decade due to a sig­nif­i­cant short­age of forex in the bank­ing sec­tor.

Not­ing that there is no sin­gle rate used in the black mar­ket, Ar­joon said prices can al­so be ar­ti­fi­cial­ly in­flat­ed. If a sell­er typ­i­cal­ly charges $7.50 but re­ceives an of­fer of $8 from a dif­fer­ent group of buy­ers, he may raise the rate to $8 across the board.

This, he not­ed, fre­quent­ly oc­curs, for in­stance, when Venezue­lan mi­grants of­fer to pay these high­er rates in the black mar­ket to se­cure US dol­lars to send to their fam­i­lies in Venezuela.

As a re­sult, many by­pass banks and use the black mar­ket to meet their forex re­quire­ments, lead­ing to two ex­change rates—an of­fi­cial rate and a high­er black-mar­ket rate.

Ex­plain­er

A web­site called Win­ton.com said black mar­kets arise when con­trols on for­eign ex­change re­strict ac­cess to the of­fi­cial mar­kets, forc­ing peo­ple to re­sort to un­of­fi­cial chan­nels.

This typ­i­cal­ly gives rise to a pre­mi­um over the of­fi­cial rate known as the black-mar­ket pre­mi­um.

The web­site not­ed that cur­ren­cy re­stric­tions are pri­mar­i­ly in­tend­ed to pre­vent de­bil­i­tat­ing cap­i­tal out­flows dur­ing pe­ri­ods of macro­eco­nom­ic weak­ness.

They in­clude ban­ning the use and pos­ses­sion of for­eign cur­ren­cies with­in a coun­try, ban­ning res­i­dents from pur­chas­ing for­eign se­cu­ri­ties or hold­ing bank bal­ances abroad, and re­strict­ing the amount of cur­ren­cy that can be im­port­ed and ex­port­ed.