Devaluation Not The Only Option

Central Bank Governor, Dr. Alvin Hilaire, believes macro-economic policies and solutions may be more important than a devaluation of the TT dollar at this time. He made the statement while speaking at a webinar hosted by the Central Bank on 'Current Financial Stability Issues.' Referring to a recent study that looked at Latin America and the Caribbean before COVID-19, Dr. Hilaire said what must be considered is the different aspects of how devaluation may work in various regions. He added that where countries had a sudden devaluation, the balance of payments contracted if there was a steep enough depreciation. The Central Bank Governor also compared the situation where there is a fixed exchange rate such as a 'currency union' like the Eastern Caribbean dollar, and regions where there is flexibility in the exchange rate. Dr Hilaire believes both situations could work to manage a country's economy, but it depends on several factors. Finance Minister Colm Imbert announced at the 'Spotlight on the Economy' Forum on Monday that Trinidad and Tobago was not considering a devaluation of the TT dollar at this time, despite criticism from experts.