BOJ Governor Says Dollar is Fairly Valued
By: , November 14, 2016The Key Point:
Photo: Yhomo Hutchinson
Bank of Jamaica (BoJ) Governor, Brian Wynter (centre), responds to a question during the Bank’s quarterly media briefing at the BOJ auditorium in downtown Kingston on Monday (November 14). Others (from left are BOJ Senior Deputy Governor, John Robinson; and Deputy Governor, Dr. Wayne Robinson.The Facts
- Speaking at the Bank of Jamaica (BOJ) quarterly media briefing at the bank in downtown Kingston, on November 14, the Governor said that economic assessments support this, and that the Bank of Jamaica (BOJ) has been active in the market to ensure stability.
- “We stand ready to sell foreign exchange to meet any shortfall that threatens (economic) stability,” the Governor assured.
The Full Story
Central Bank Governor, Brian Wynter, is maintaining that the Jamaican dollar is fairly valued at the current exchange rate of just over $129 against the US dollar.
Speaking at the Bank of Jamaica (BOJ) quarterly media briefing at the bank in downtown Kingston, on November 14, the Governor said that economic assessments support this, and that the Bank of Jamaica (BOJ) has been active in the market to ensure stability.
Mr. Wynter indicated that, to date, the dollar has depreciated by 5.9 per cent for fiscal year 2016/17.
He noted that most of the movement for 2016/17 occurred between April and May, consequent on several factors, adding that since then, the market has returned to “more orderly” trading patterns.
This, Mr. Wynter said, resulted in a small appreciation in the exchange rate within the last three weeks.
He advised that the bank sold US$475 million to the market through its intervention during the first six months of the current fiscal year.
“We stand ready to sell foreign exchange to meet any shortfall that threatens (economic) stability,” the Governor assured.
Mr. Wynter said that while achieving macroeconomic stability is “at the heart of the bank’s mandate, this is not an end in itself”.
“What stability provides is the foundation for sustained economic growth and job creation, which in turn are achieved as a result of a period of sustained investment by private firms and individuals,” he added.
As such, the Governor is encouraging the society’s continued focus on productive, import-substituting and export-oriented activities, pointing out that “the environment is ripe with opportunities”.
Mr. Wynter pointed out that the bank is temporarily tightening Jamaican-dollar liquidity, “in order to influence the choices that portfolio managers make”.
He indicated that the bank has exercised its option to make early payments on US dollar-denominated certificates of deposit (CDs), by giving the contractually required three months’ notice.
“We are taking steps to persuade holders of these US-dollar CDs to take back their money even earlier,” the Governor said, advising that additional details on this action will be disclosed at a later date.