Foreign Exchange Market and Exchange Rate Management
The Bank is responsible for the management of the Foreign Exchange Market in the public’s interest. Under the Exchange Control Act, the Bank licenses authorised dealers in foreign exchange which include commercial banks and non-bank financial institutions. The Bank has also licensed a number of institutions to operate as Bureaux de Change.
The Bank may intervene in the foreign exchange market to contain undue volatility in the exchange rate. Before the Bank makes a decision to intervene in the foreign exchange market, it assesses a number of variables including current economic conditions, competitiveness of the exchange rate, short-term imbalances and the level of international reserves.
In April 1993, Trinidad and Tobago adopted a floating exchange rate regime. Since then, the value of the Trinidad and Tobago dollar appreciates or depreciates in response to changes in supply and demand conditions in the foreign exchange market and the intervention policy of the Bank. In practice, the foreign exchange system is a managed float.