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JIS News

The Jamaican dollar closed trading last week at $86.83 to the United States (US) dollar, representing an appreciation of approximately three percent against the US currency since the beginning of the year.
This is seen as a welcomed sign of improvements in some key macroeconomic fundamentals, and an indication that efforts by the Government to build confidence in the economy are succeeding.
During the corresponding quarter last year, the local currency traded at $89.05, reflecting more than 10 per cent depreciation in its value for the year. At the beginning of the year, the Jamaican dollar traded at $89.59 against the US dollar.
By mid-week, foreign-exchange purchases totaled nearly US$33 million, while sales stood at just under US$49.5 million.
The positive developments in the foreign-exchange market was influenced by a healthy level of net international reserves of US$1.7 billion at the end of April, representing 18.49 weeks of projected goods and services imports.
Data released recently by the Ministry of Finance and the Public Service revealed significant improvements in key fiscal indicators. At the end of April, revenues and grants collected out-performed the target for the month by $324.9 million to stand at $12.5 billion.
Tax revenues collected for the month amounted to $18.3 billion, compared to the budgeted $17.9 billion. Central government spending in the period was also curtailed by some $147.9 million for the month, to post an expenditure figure of $27.831 billion compared to the budgeted figure of $27.979 billion.
On the supply side, improvements in the world’s major economies appear to be having a positive impact on Jamaica, with stopover tourist arrivals increasing by 9.2 per cent for the first quarter of 2010 and remittance inflows climbing by 9.7 per cent.
With the passing of the first IMF test and in anticipation of a second disbursement of US$100 million, before the end of June under the Standby Arrangement, the positive developments on supply side are expected to continue going forward. The additional inflows will serve to increase the Bank of Jamaica’s ability to advance the continued stability in the foreign exchange market.
Developments in Jamaica’s trade dynamic for the month of January reveal that imports declined by 18.8 per cent, while exports increased by 6.9 per cent. Non-fuel imports fell by 33 per cent, following a 26 per cent decline for all of 2009.
Barring adverse weather conditions and significant increases in the price of crude oil, the stability in the exchange rate is expected to continue for the remainder of 2010.
The positive outlook is expected to boost investor confidence. This is likely to be further reinforced by lower interest rates, generated by the Jamaica Debt Exchange and the continued moderation of the rate of inflation.