The Central Bank of Suriname (CBvS) has urged society to maintain calm in the foreign exchange market and refrain from speculative behavior. According to the parent bank, the recent rise in exchange rates is mainly due to uncertainty and irrational market sentiment, not fundamental economic deficits.
In a press release, the CBvS expressed concern about the behavior of both demanders and providers in the foreign exchange market. The bank points out that rumors and unsubstantiated reporting contribute to a climate of panic, unnecessarily undermining confidence in foreign exchange policy.
Increased pressure since March
Pressures on exchange rates have increased since March. According to the CBvS, this is partly due to higher domestic spending and global volatility in international currency markets. The bank acknowledges that these external factors are partly responsible for the fluctuations, but says that current market sentiment is mainly fueled by expectations of further exchange rate gains, fueled by uncertainty.
Currency exchanges as a policy tool
To stabilize the market and curb excessive rate increases, the CBvS carried out three targeted interventions through currency auctions in April and May. This involved selling US dollars to banks and cambios. These actions removed more than SRD 1.2 billion in excess liquidity from the economy.
These interventions fit within the bank's broader monetary policy, which aims to use international reserves responsibly. According to the CBvS, such measures are applied only when:
- an excessively rapid increase in exchange rates within a short period of time; or
- a marked deviation of the market rate from the theoretically justified range, as determined by the bank's internal exchange rate models.
Call to responsibility
The CBvS underlines that it has several instruments at its disposal to bind excess liquidity and counteract price pressures. If necessary, it will not hesitate to take additional measures to dampen price increases and keep inflation within manageable margins.
Finally, the bank calls on citizens, businesses and market participants not to undermine the hard-won confidence in the flexible exchange rate system by acting irrationally or speculatively. "The market works only when participants' behavior is based on realistic expectations and not on fear or rumor," the statement said.
