PARAMARIBO, Suriname, CMC – The Central Bank of Suriname (CBvS) Monday said it regrets the “speculative behavior” of buyers and sellers in the currency market as well as messages that “unnecessarily strengthen sentiment in the market.”
In a statement, the CBvS said that since March, increased spending in the economy and exchange rate volatility on international currency markets have increased pressure on exchange rates, and the effects of this have already been passed on to market rates.
“Anticipating market rates above the current exchange rates is currently mainly driven by uncertainty and speculation,” the CBvS said, adding that it has built up its international reserves and aims to keep them at a responsible level.
“The policy is aimed, among other things, at using these reserves responsibly in the event of disorderly market developments. It, therefore, held three currency auctions in April and May, during which US dollars were sold to banks and exchange offices.
“This withdrew more than SRD1.2 billion (One SRD=US$0.02 cents) in liquidity from the system, which contributed somewhat to dampening the exchange rate increase,” the CBvS said, adding that it carries out such interventions in a “(too) rapid increase in market prices within a predetermined time frame and/or a significant deviation of the published market rate from the theoretical bandwidth that the CBvS considers responsible based on its exchange rate models.”
The CBvS stated that, in addition, it utilized instruments to manage excess liquidity in the local economy.
“The CBvS will not hesitate to tighten measures to curb the excessive rise in the exchange rate and thus keep inflation within acceptable limits.
“The CBvS urgently calls on society not to unnecessarily disrupt the laboriously constructed market mechanism of the flexible exchange rate system through speculative behavior and the strengthening of negative sentiments,” it added.
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