Stronger pound pinching imports
Stabroek News
March 26, 2004
Imports from the United Kingdom are being hurt by the strong pound, and some businessmen and customers are turning elsewhere for cheaper products.
The weakness in the US dollar continues and as long as the Guyana/US rate remains relatively fixed, the exchange rates with the euro and pound sterling will head downward too.
Since January 2001 the pound sterling mid rate, according to the Bank of Guyana, has gone from G$266.13 to G$313.7. That was up to December and since then it has slipped further. Some say US$2 to one pound is on the books by year-end.
Great for UK Guyanese returning for a holiday or UK pensioners living here.
But not for Patricia Deen General Manager of Central Garage given that the company imports both cars and spare parts from Europe.
She says increased import prices have had to be passed on to the customer. "This is a problem that customers have been complaining about. The prices are very high and customers are looking for better avenues to get their parts into the country."
Naranjan Singh, an accountant at Ainlim also says import prices are up on items from Europe. "We import from North America or the UK regularly. Parts coming in from Europe are mainly for heavy-duty equipment and agricultural spares."
A manager at Kanhai's Electrical and Electronic Store also says prices are increasing on UK imports. He says up to late last year a roll of cable cost G$6000 but it is now up to $8400.
(Several other factors are involved here since commodity prices, including copper, have risen strongly in recent months. Increased shipping costs may also be to blame.)
Jaipaul Bharat, the manager of Paul's Muffler's and Motor Spares says prices for some imports have gone up by 20-25% and has had to discontinue bringing them in as customers would find it difficult to pay.
The Managing Direc-tor of Banks DIH for instance has lamented the depreciation of the US dollar publicly since this company buys its products in Europe and therefore would need to spend more of its US currency to obtain its raw materials.
The dollar slide has not escaped the comments of Professor Clive Thomas who warned in a recent article that, "the region finds itself caught up in the slide of the US dollar, to which we bind the fortunes of our currency...
"Because Caricom member states peg their currencies against the US dollar, their currencies have followed the US dollar and depreciated against other currencies with which we trade significantly, particularly the Euro, the Japanese Yen, the British Pound and the Canadian dollar. This has gone by without notice or public comment, so many are the problems that the region faces."
However there are some benefits for exporters to Europe, including Guysuco which is enjoying higher prices for its sugar and has locked in minimum prices in the long run. Some 15 of 17 shipments for 2004 have already had their rates fixed and in 2005, rates on some future shipments have been fixed at $1.15 to $1.18 to the Euro.