The Central Bank of Trinidad and Tobago (CBTT) has reported that foreign exchange market conditions have remained tight throughout the year. The bank noted that these conditions have had a continued impact on the outcomes for foreign currency credit and deposits. The CBTT highlighted that the ongoing market pressures have influenced the availability and demand for foreign currency, affecting overall financial activity in the country.
In its Monetary Policy Report for November, the CBTT said the growth rate of foreign currency credit, though still robust, decelerated slightly, recording a year-on-year increase of 23.8 per cent in September 2024, down from 25.4 per cent in April.
It said commercial bank foreign currency lending picked up pace (24.9 per cent), but the growth in non-bank foreign currency lending slowed considerably (10.3 per cent).
Regarding foreign currency credit to businesses, in September 2024 an increase of 30.7 per cent was observed, down from 33.4 per cent in April 2024 and the CBTT said based on prudential indicators it is monitoring, the growth observed in foreign currency lending, currently, does not suggest a buildup in financial risks.
It said that for foreign currency deposits, growth in foreign currency deposits accelerated over the period, after recovering in April (1.5 per cent).
In September 2024, foreign currency deposits expanded by 7.5 per cent (year-on-year). The growth in business foreign currency deposits gradually accelerated over the period, reaching 5.6 per cent in September 2024 (up from 3.5 per cent in April).
Consumer foreign currency deposits continued to decline but at a slower pace — compared to a 2.5 per cent contraction in April 2024, consumer foreign currency deposits fell by 1.8 per cent in September 2024.
The CBTT said the growth in foreign currency deposits held by entities such as public sector entities and other financial institutions picked up pace, reaching 19.6 per cent in September 2024 (up from 2.7 per cent in April).
But it said that foreign exchange market conditions remained tight thus far this year.
“Purchases of foreign exchange by authorized dealers from the public amounted to US$3,725.5 million over January to October 2024, a decrease of 0.7 per cent relative to the same period a year earlier.
“The marginal decrease in purchases followed a 0.3per cent rise in conversions by energy companies relative to the same period in 2023. For the period January to October 2024, purchases from the energy sector accounted for 72.7 per cent of total foreign currency purchases over US$20,000 in value,” the CBTT said.
It said sales of foreign exchange by authorised dealers to the public reached US$4,927.4 million over January to October 2024, a decrease of 5.7 per cent relative to the same period a year prior.
“Based on reported data for transactions over US$20,000, credit cards (43.7 per cent), energy companies (17.1 per cent), retail and distribution (15.8 per cent), and automobile companies (5.3 per cent) made up the bulk of foreign exchange sales by authorised dealers to the public. The net sales gap reached US$1,201.8 million during the period. To support the market, the central bank sold US$1,075.0 million to authorised dealers,” the CBTT added.
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