Government Intervention in Foreign Exchange Market

Introduction to the Crisis

GEORGETOWN, Guyana, CMC—The Guyana government says the Bank of Guyana will inject US$100 million into the market with immediate effect and distribute it across all commercial banks following “recent developments in the banking system specifically in relation to the market for foreign exchange.”

A statement issued by the Ministry of Finance said that the decision was taken on Monday following discussions between Vice-President Bharrat Jagdeo, Finance Minister Dr. Ashni Singh, and the Central Bank Governor, Dr. Gobind Ganga.

Causes of the Crisis

“At the meeting, note was taken of the continued availability of adequate levels of foreign currency in the financial system to meet ongoing demand, despite occasional timing differences.

“These timing differences have resulted in some delays being encountered in the settlement of orders for foreign currency from time to time at some commercial banks,” the statement said.

Solution to the Crisis

It said that “in order to ensure that pending requests for foreign currency are met in a timely manner, the decision was taken that a sum of US$100 million will be injected into the market with immediate effect and distributed across all commercial banks.

“This injection will provide immediate relief to the system in meeting pending demand for foreign currency while the temporary timing mismatches unwind themselves,” the statement said.

Government Engagement

It said that the government remains closely engaged with the private sector, including the commercial banks, to ensure that the market continues to function efficiently.

Conclusion

The injection of US$100 million into the market is expected to stabilize the foreign exchange market and prevent any further disruptions. The government’s prompt action demonstrates its commitment to maintaining a stable financial system.

Frequently Asked Questions

Q: What is the purpose of the US$100 million injection?

A: The purpose of the injection is to provide immediate relief to the system in meeting pending demand for foreign currency and to stabilize the foreign exchange market.

Q: How will the US$100 million be distributed?

A: The US$100 million will be distributed across all commercial banks.

Q: What is the government’s role in the foreign exchange market?

A: The government remains closely engaged with the private sector, including the commercial banks, to ensure that the market continues to function efficiently.