Role of cambio offices has gotten out of hand

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The role of cambio offices, or currency exchange bureaus, has taken on a different meaning than what they were originally intended for. Initially, they were meant to sell small transactions or amounts of foreign currency to the public. Nowadays, even importers go to these exchange offices to purchase foreign currency. As a result, cambio offices have gained a dominant position, says economist Winston Ramautarsing in an interview with LIM FM.
The former chairman of the Surinamese Association of Economists (VES) supports setting a limit that exchange offices must adhere to. Selling excessively large amounts of foreign currency was never the intention, according to the economist. However, he points out that exchange offices are not solely responsible for consistently driving up the exchange rate, as they cannot do so indefinitely.
Ramautarsing believes that just as exchange offices cannot drive up the exchange rate, they also cannot lower it. He instead looks to the Open Market Operations (OMO), which have become less attractive now that interest rates have plummeted. To make them appealing again, the Central Bank of Suriname (CBvS) would need to raise interest rates. As it stands, it is no longer attractive for people to exchange their dollars for SRDs to invest in OMOs.
Additionally, the economist addresses a misconception about the influence of the customs exchange rate on high retail prices. The customs exchange rate is set every two weeks and has only limited impact on price levels, as it only applies to import duties paid at the port. However, it is concerning that the customs exchange rate has recently increased by SRD 2.
According to Ramautarsing, the only solution is to increase domestic production so that more foreign currency flows into the country, strengthening the SRD. Once the SRD becomes stronger, there will no longer be a need for the public to hoard dollars. He also warns that taking out loans is not a solution to stabilize the exchange rate, as it is a ticking time bomb. The country will eventually have to repay these loans with its already scarce resources. Suriname’s economy needs to be structured in such a way that it is not dependent on luck, but on performance, says Ramautarsing.