The East Caribbean Dollar, the primary currency of Grenada, is tied to the United States dollar at an indirect rate of $ECD 2.70 to $USD 1.00. This has been the case for the last 35 years (ECCB, 2013). The pegging of the ECD began in the mid 1970’s (7 July 1976) and was employed as a mechanism to stabilize inflation and support the emerging economies of the Caribbean states, many of which were just becoming independent during that time (ECCB, 2013). The direct rate of $ECD 1.00 to $USD 0.37 causes many foreign travelers to Grenada, primarily on vacation, to feel that some goods are overpriced, causing them to pay in USD (which are widely accepted on the island) (Eastern Caribbean Central Bank, 2013).
The primary trading partners of Grenada are the United States (27.7% of imports and 11.6% of exports) and Trinidad and Tobago (25.4% of imports) (WTO, 2012). The trading rate for the USD to the ECD is set to $1.00 USD to $2.70 ECD (Eastern Caribbean Central Bank, 2013). The Trinidad Tobago Dollar (TTD) fluctuates with respect to the ECD and USD. The $1.00 ECD was worth $2.374 TTD as of the 22 July 2013 (Eastern Caribbean Central Bank, 2013). Over the past year, the TTD has fluctuated between a low of $2.3581 TTD to $2.3839 for one $1.00 ECD (Eastern Caribbean Central Bank, 2013).