A disparity therefore exists between the $US quantity demanded and the quantity supplied, consequently a shortage occurs. The current price ceiling stipulated by the Central Bank is the reason for the shortage.
Note that all economic shortages are a function of a price mismatch and when the price is set below the equilibrium rate or the market clearing price where supply equals demand, there will be a shortage.
The consequences of this market manipulation are as follows:
- Black markets - people willing to pay more for foreign exchange outside the traditional outlets.
- Hoarding - persons purchasing $US and sitting on it for fear of future unavailability.
- People being forced to use travel money cards or credit cards instead of US cash at additional expense.
- Rationing - artificial controls on demand
- Non-monetary bargaining methods, such as queuing, nepotism or favouritism
- Price discrimination - well connected pay one rate while the average citizen pays a less favourable rate.
- The inability to get any foreign exchange on demand.
More in depth further Reading: Why US Currency Is So Hard to Come By in T&T