Foreign Exchange Boost As Central Bank Defends Fixed Exchange Rate

• Barbados has reinforced its international reserves and defended the stability of its currency through a series of repatriations and foreign exchange sales, according to the latest annual report from the Central Bank of Barbados. The measures have helped maintain the country’s fixed exchange rate and provided a robust buffer against global economic shocks.
• The country repatriated some $84Mn in foreign currency held abroad back to Barbados currency, alongside sales of the Barbados dollar last year, the report revealed. The report, which has been laid in Parliament, showed there were 17 such repatriations in 2024.
• Pointing out that the bank continued to prioritise the protection of Barbados’ fixed exchange rate, the report said that, while this figure represents a decline of $51Mn relative to 2023, the proceeds from these sales continued to provide a boost to the country’s international reserve.
• “Sales of United States dollars abroad totalled $33Mn in 2024, less than half the amount traded a year earlier, while sales of Great Britain’s pounds sterling fell to $8Mn in 2024, a decrease of $7Mn compared to 2023,” the central bank said. The trading of Canadian dollars, Eastern Caribbean dollars, and euros each yielded $2Mn by the end of 2024, while Barbados currency sold abroad increased by $4Mn to reach $37Mn.
• Citing reserves management as the anchor for a strong Barbadian dollar, the financial institution insisted that maintaining a high level of international reserves is crucial for upholding the peg of two Barbadian dollars to one United States dollar.
• “Maintaining reserves significantly above this benchmark is crucial, as it provides a substantial buffer against external shocks, such as fluctuations in international markets or economic downturns.” It contended that this excess in reserves enhances investor confidence, underpins the stability of the Barbadian dollar, and ensures that the Central Bank can meet its foreign obligations and support the import-dependent nature of the economy without strain.

(Source: Barbados Today)