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Ministry of Foreign Affairs dispels devaluation rumors

In the wake of the downgrade of The Bahamas’ sovereign credit rating by Standard and Poor’s (S&P), the Ministry of Foreign Affairs has been forced to dispel rumors that this country’s currency has been devalued, after a purported receipt from a currency exchange operation in Florida showed the local currency exchanged at almost $0.75 on the dollar.

The ministry released a statement yesterday to ensure that Bahamians understand the Bahamas dollar is still pegged one-to-one with the U.S. dollar.

“The public is advised that in Bahamian law, the Bahamian dollar is one-for-one to the U.S. dollar when traded across the counter in Nassau and throughout The Bahamas, whether in a bank or in a store,” the release said.

“This has been the position since the change from the Bahamian pound to the Bahamian dollar in 1966. That position remains unchanged today.”

The receipt from the currency exchange shows that the money was exchanged days before S&P issued information on the country’s downgrade publicly.

Last week, after discussions on the downgrade began, The Central Bank of The Bahamas issued a statement also ensuring the public that there is no danger of the country losing its dollarization.

“The Bahamian dollar remains supported by the Central Bank’s external reserves, for which the outlook is for stable to incrementally firming balances,” said the Central Bank in a press release.

“In this regard, net foreign exchange earnings prospects for The Bahamas have been enhanced by the expected increase in hotel sector capacity during 2017 and 2018.

“In the near term, external balances will also be supported by reinsurance inflows for private sector rebuilding in the aftermath of Hurricane Matthew.”

The Ministry of Foreign Affairs also warned Bahamians that currency exchanges are businesses that set their own rates based on “whatever they believe the market can bear”.

“Whatever price the trader in the U.S. charges is entirely a matter for that trader and his or her customer, but does not impact or reflect the trading value or official one-for-one exchange rate of the Bahamian currency in The Bahamas,” the ministry’s release said.

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