Mr Rajendra Rampersaud’s letter in Stabroek News, of October 27, 2010, ‘Ram’s analysis in relation to the exchange rate was flawed’ refers.
Citing data from the 2009 and 2010 half-year reports of the Bank of Guyana where Mr Rampersaud works, I wrote in last Sunday’s Business Page that the “exchange rate of the Guyana Dollar to its US counterpart depreciated by 0.25 per cent compared with an appreciation of 0.37 per cent at end-June 2009.” That came from their reports; it was not spun by me. And a single sentence that states that it is incorrect to measure a floating Guyana Dollar against only one other currency is hardly a harp – musical or otherwise – or self-serving – to whom or what I haven’t a clue.
I find it interesting that a country whose exchange rate management was practically dictated by the IMF for nearly twenty years is significant and unique enough to develop the concept of a “home grown, official” exchange rate. Mr Rampersaud should identify the experts in the Bank of Guyana and their reasons for deciding that the decades-old methodologies established by international financial institutions, central bankers and academics are inappropriate to Guyana. To use Mr Rampersaud’s word properly, both the IMF’s assessment and his reliance on it are a classic case of “self-serving.”
The statement in Business Page to which Mr Rampersaud refers, derives its support and basis from the June 2010 Bank of Guyana report, Table 9.2 (b) which shows that over the period December 2000 to June 2010 the Guyana Dollar depreciated against the US Dollar from $184.75 to $203.75 or 10.3%. In turn, over the period December 2001 to April 2010, the dates for which the Bank of Guyana provided figures, the US Dollar depreciated against the Canadian Dollar by 36.5%; the Euro by 33.8% and the Pound Sterling by 5.4% (Table 9.5). I can understand why Mr Rampersaud would wish to avoid such realities. What I cannot understand is why he would consider such statistics and analyses necessary in a newspaper column dealing with national accounts.
Let me put it another way. Based on the selling rates by Guyana’s leading commercial banks, at December 31, 2000, it took G$120.63 to buy one Canadian Dollar. Today it requires $191.27. That is a 58.6% change. At December 31, 2000, it took G$267.28 to buy one pound Sterling. Today, that will cost $298.57, a downswing of 11.7%. At December 31, 2000, it took G$185.65 to buy one US Dollar. Today, that requires $203.70, some 9.75% more, proving the point that the US Dollar has lost against those three major currencies. For the average Guyanese buying Canadian Dollars, official exchange rate stability is a mirage.
Finally, it may seem a small point, but as an economist with the central bank, Mr Rampersaud should know that the Bank of Guyana Act abolished cents since 1998. He should know as well that professionals and technocrats do the public a great disservice by being careless, incorrect or recklessly disregarding accuracy.