Tuesday, August 13, 2013

Here we go again

GRTS has just announced the latest diktat from the Office of the President pegging the rate of exchange of the dollar to D35 adding to an already confused atmosphere.  Jammeh did not only end there but added that Bureau de Change are no longer able to issue cash; you have to collect it from the banks further muddling a forex market that is already muddled enough, thanks to a level of incompetence never seen in Central Bank of The Gambia (CBG) history - not even at the infancy of the CBG under the leadership of the late Sheriff S. Sisay.

By barring Bureaus from issuing cash, they are dead ducks because their business is CASH. If these bureaus are forced to close, it is in direct contravention of current law because they are legal and form an integral part of the financial infrastructure. The announcement further seemed to be forcing commercial banks back into the forex business. See The Gambia Echo http://thegambiaechos.com/index.php/permalink/3990.html showing how banks are making huge profits in the forex trade even when do not have a single American cent in their vaults, and questioned why the CBG is not requiring banks to carry minimum level of foreign exchange as normal banking practice.  

For the new policy to work the CBG must require banks to carry minimum foreign exchange requirement just like they are required to carry minimums on capital to protect customers as I have been suggesting all along.  Whether they recognized the additional nonsense they've created is anybody's guess.  All we can do at this point is to sit and watch a train wreck that need not have happened.