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No threat to foreign currency reserves from Hurricane Dorian

The Central Bank of The Bahamas. FILE

There is no threat to The Bahamas’ foreign currency reserves as a result of Hurricane Dorian, Governor of The Central Bank of The Bahamas (CBOB) John Rolle said yesterday, explaining that while some of those reserves may be impacted sometime next year as the rebuilding on Grand Bahama and in the Abacos begins, they will not come close to being depleted.

Rolle, who was a guest on Guardian Radio 96.9’s Z Live, further explained that there is no threat to the country’s U.S. dollar peg, as some have suggested.

According to the governor, the central bank currently has about $1.5 billion in reserves. While it is expected to dip sometime in 2020 as a result of the hurricane damage and rebuilding activities, Rolle said it won’t be to worrying levels.

“The rebuilding is going to use foreign exchange,” he said.

“Medium and longer term there is no negative implication to foreign reserves because of this. It is manageable. We are not in a position of concern around that right now.”

He added that activities that will earn foreign exchange, like tourism, could be at a standstill in the short to medium term, especially on Grand Bahama and Abaco. Rolle said those islands represent roughly 15 percent of the country’s economic activity.

However, he said money will flow into those islands as insurance claims begin to be paid out, but he added that government itself will have to borrow in the wake of this tragedy.

“Given what has just happened, we expect that there will be some money flowing into The Bahamas… the money that the insurance companies will get from their reinsurance payments,” Rolle said.

“There is going to be some foreign currency borrowing that the government takes on.”

Rolle added that even if The Bahamas reaches a point where it needs to replenish its stock of foreign exchanges, it has a means of access to it with “no strings attached”.

Chester Robards

Senior Business Reporter at The Nassau Guardian
Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian.
Education: Florida International University, BS in Journalism
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