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Foreign exchange market
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The foreign exchange market was
reformed in 1990 when the parallel
market rate was merged with the
official rate. The cambio market was
developed in March 1990 when
commercial banks and several nonbank
traders were allowed to trade
foreign currencies – mainly the US
dollar, British Pound, Euros and
Canadian dollar. The idea was to allow
the market to determine the rate rather
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Average lending rate
Average deposit rate
SPREAD (right-axis)
than have the government set the rate.
As at the end of 2008, there were 21
licensed foreign currency dealers.
However, the six commercial banks
still dominate the purchases and
sales of foreign currencies accounting
for approximately 90% of all trades
at the end 2008. The US dollar is
still the dominant currency traded
(approximately 89% in 2008).
The Guyana dollar/US dollar exchange
rate has depreciated substantially over
Guyana Business 2010 | 66
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the years since 1990. In 1990 one US$
bought around $G40, while at the end
of 2008 the rate of exchange stood
at 1US$ = G$206. However, this rate
has demonstrated noticeable stability
since 2005; so much so that the IMF
has classified Guyana to have a de
facto pegged exchange rate regime.
The academic literature has a lot to say
about the choice of an exchange rate
regime (pegged versus floating); but
that is beyond the scope of this essay.
By Tarron Khemraj