KINGSTON: Financial experts are praising the decision by the Bank of Jamaica (BoJ) to intervene in the foreign currency market in a bid to stabilize the local currency.
The BoJ stepped in to stabilize the local currency, which is traded at J$112.71 to one US dollar as of press time. However, there are concerns as to whether or not the BoJ has enough reserves to maintain the intervention.
Assistant Trading and Treasury Manager at Jamaica Market Money Brokers (JMMB), Kwame Brooks, said the intervention is possible for the immediate future.
“I think they will maintain a presence in the market to ensure orderly movement going forward. Usually the Central Bank doesn’t indicate how many days of intervention…it’s on a need to be basis.
“What they will do is be vigilant and to keep a close eye to ensure that the movement is orderly,” he said, noting that the move by the BoJ to stabilize the dollar will benefit from the assistance of major foreign exchange dealers.
President of the Private Sector Organization of Jamaica (PSOJ) Chris Zacca is urging Jamaicans to focus on working efficiently to improve growth in the country instead of continuously talking about the devaluation of the Jamaican dollar.
Zacca acknowledged that the sliding dollar is hurting the nation’s economy. But he believes that the emphasis being placed on the currency’s value is distracting businesses from focusing on production.
“The dollar is a market-determined rate, anyway,” he said. “Let’s stop talking that it is going to be that much at the end of the year and let us put our heads down and do what we have to do to run the country and our businesses.”
Former finance minister, Audley Shaw, said the intervention of the BoJ is in line with the policy of stability “promoted and successfully applied by the opposition Jamaica Labour Party (JLP).
“We have been warning the government for months that devaluation is hurting business, hurting people and hurting Jamaica. We were criticized for our positions, but as the higher prices and speculation have become chronic along with undeniable reductions in exports, it seems the BoJ has finally woken up,” he said in a statement.
Although he welcomed the initiative, Shaw, the JLP’s spokesman on Finance, said it did not go far enough.
“Investors do not know the direction of the government so businesses cannot plan,” he said. “The government could decide next week to start devaluation again and this possibility does not bring confidence to the market and to the business sector.”
Shaw has called on the government to “state its policy direction clearly, and its policy must create a stable and predictable environment”.
He said that if Jamaica is to benefit from the current IMF (International Monetary Fund) agreement, “the government must also come up with a proper growth and development policy that is bankable and saleable,” one that includes a robust growth strategy”.