Governor Roemer: “Exchange rate increase triggers inflation”

Governor Maurice Roemer of the Central Bank of Suriname (CBvS) warns that a further rise in the exchange rate will trigger inflation in the country. He urged everyone to contribute to stability on the economic front. Various factors can cause a spike in the exchange rate, some of which are temporary, such as the availability of foreign currency.
During a press conference, the Central Bank director expressed disappointment that businesses stopped adhering to the 35% remittance policy on export earnings after the exchange rate showed a declining trend. This has led to insufficient foreign currency reserves.
Failure to comply with the remittance policy, combined with trigger points, creates shortages, resulting in rising exchange rates. Roemer noted that many people are converting their local currency into foreign currency, further increasing pressure.
The bank observes that nearly 80% of bank account holders in Suriname hold foreign currency accounts, which Roemer considers remarkably high. He pointed out that people are seeking foreign currency not only for transactions but also as a precautionary measure. According to Roemer, the foreign exchange market is driven by expectations, yet the outlook for Suriname is favorable.
He cited the Final Investment Decision (FID) and a positive rating from Moody’s as reasons for optimism and questioned the rush for foreign currency. He also emphasized that expert analyses in the media impact the economy.
Roemer expressed concern about the exchange rate’s development since September 2 this year, noting a significant increase. He argued that this rise exceeds the economic fundamentals and is now driven purely by sentiment. He suggested that hidden interests are at play, which the Central Bank does not support.
He urged the public not to buy U.S. dollars at the current elevated rates, pointing out that it is impossible to convert every Surinamese dollar (SRD) into foreign currency. The Central Bank is implementing measures at banks and exchange offices to prevent speculative hoarding of foreign currency.
Roemer also assured that his financial institution is working to prevent disruptions in foreign payment transactions. He emphasized that international transactions can continue as usual through local banks.