BOJ Says Depreciation Has Slowed Significantly

Bank of Jamaica (BoJ) Governor, Brian Wynter, says depreciation in the foreign exchange rate has slowed significantly for the 2014/15 fiscal year, to date, relative to the previous year.

Speaking at a media briefing at the BoJ, in downtown Kingston, on Wednesday, January 21, Mr. Wynter said the rate of depreciation, relative to the United States dollar, up to Monday, January 20, was 5.3 per cent.

This, he pointed out, is a 2.8 per cent lower than the 8.1 per cent recorded for the   previous fiscal year, adding that “we now expect that the rate of depreciation will slow further.”

Explaining the reason for this welcomed development, Mr, Wynter informed that “the (net) current account deficit in Jamaica has narrowed dramatically; therefore, net demand for foreign currency from that source is much lower.”

Net current account demand relates to foreign exchange sourced to purchase goods and services externally.

The Governor pointed out that the lower exchange rate depreciation has also been influenced by declining global oil prices, and the narrowed inflation differential between Jamaica and its main international trading partner, the United States (US).

The US recorded an inflation rate of 0.80 per cent in December 2014, down from 1.3 per cent the previous month. This represented the lowest inflation figure recorded by the US in five years.

“The new outlook for (Jamaica’s) inflation rate narrows the…differential substantially. So, this is why we expect that exchange rate depreciation should now slow down (even further),” Mr. Wynter added.

This figure is forecast to fall within the range of 3.0 and 5.0 per cent this year.