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GIS – The Eastern Caribbean currency has been pegged to the United States dollar at a fixed rate of EC $2.70 since 1976.
The Eastern Caribbean Central Bank (ECCB) has said that the EC dollar is as strong as ever despite the withdrawal of the currency’s one-cent and two-cent coins.
Deputy Governor for the ECCB, Trevor Brathwaite, said the Eastern Caribbean currency has been pegged to the US dollar at a fixed rate of EC $2.70 for the past 39 years–which has worked well for the OECS currency.
“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,” Mr. Brathwaite said.
He added that the backing ratio of the EC dollar is “high up” in the 90 percent range.
“The EC dollar is as strong as ever,” he said. “The backing ratio of the EC dollar is above the limit. As of last week it was at 96.5 percent, which is well above our comfort limit, and we will continue to ensure that the dollar is adequately backed by our foreign reserves, which is one of our main objectives, and so far it has been maintained.”
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 ECCB’s foreign reserves are obtained from the influx of foreign currency into the region.
“If our countries export items to other countries and they are paid in foreign currency, it is pooled into a reserve. Also, when tourists visit our countries and they spend foreign currency like the US, Pound Sterling, and Euro currencies, all of it is collected and pooled and the ECCB invests all these monies in the foreign market. That keeps us stable 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.
Saint Kitts, Saint Vincent & the Grenadines, and Saint Lucia.