The Eastern Caribbean Central Bank (ECCB) is boasting that, for the 39th year, the Eastern Caribbean Currency has been pegged to the US dollar at a fixed rate of EC $2.70.
The rate for the last financial year was disclosed by Deputy Governor of the ECCB Trevor Brathwaite, who added that this means the currency is doing well.
The EC dollar has been pegged to the US dollar since 1976, and that peg is the anchor that gives investors and citizens of Eastern Caribbean certainty and confidence in the stability of the currency which is used by eight members states.
Brathwaite added that the backing ratio of the EC dollar is high up in the 90 percentile.
“The EC dollar is as strong as ever. The backing ratio of the EC dollar is above the legal and administrative limit. As of last week it was at 96.5 per cent which is well above our comfort limit and we will ensure the dollar is adequately backed by our foreign reserves which is one of our main objectives and so far it has been maintained,” Brathwaite said.
The legal limit is 60 per cent foreign reserves to back the EC dollar, while the administrative limit is 80 per cent, Brathwaite said.
The ECCB agreement regulates the levels of foreign reserves that the bank should hold and it also regulates the calculation for the backing of the currency.
“The foreign reserves we hold are obtained from the influx of foreign currency into the region so it will either be by export. If our countries export items to other countries and they are paid in foreign currency, it is pooled into a reserve.”
“When tourists visit our countries and they spend the foreign currency, US, Pounds Sterling, Euros etcetera, all of it is collected and pooled and we invest all these monies in the foreign market and that keeps us tight in terms of the reserves we have to back the EC dollar,” Brathwaite explained.
The EC dollar is the official currency for Anguilla, Antigua & Barbuda, Dominica, Grenada, St Kitts, St Vincent & the Grenadines, St Lucia and Dominica.