Governor of the Bank of Jamaica (BoJ), Brian Wynter, says that the movement of the dollar is in keeping with the Bank’s expectations.
He was speaking with journalists this morning (June 13), at the Jamaica House press briefing held at the Office of the Prime Minister.
Mr. Wynter said the exchange rate, which recently passed the $100 to US$1 mark, and the potential impact on prices in the economy, have been anticipated and factored into the Central Bank’s inflationary outlook, which has been set at about 8.5 to 10.5 per cent for this fiscal year.
Stating that there is no need to panic, he said that this kind of exchange movement is “beneficial to those who are seeking to penetrate export markets,” as it gives them a price advantage.
He noted that while he understands the concerns expressed by some persons, the depreciation of the local currency must be placed in the correct context.
As to whether the dollar will reach $110 this year, the BoJ Governor made it clear that it would be unwise for the Bank to attempt to predict the extent to which the dollar would depreciate, noting that this will be determined by the market.
Mr. Wynter explained that the dollar is operating under a flexible exchange rate regime to which the Central Bank is committed, and so, is determined by supply and demand.
“The BoJ’s commitment to a flexible exchange rate and to low inflation provides us with the combination that is the most conducive to maintaining a competitive export-driven growth in Jamaica and that’s what we need to achieve,” he stated.
He argued that “if you combine this with the historically low interest rate, then you would see that this arrangement favours a strong build-up in the export markets, but it requires some transformation and change in our approaches and our attitudes.”
He said the Central Bank’s mandate is to maintain inflation or price stability, and so “it must be careful about not indicating the likelihood of any given exchange rate”.
“So, the BoJ is not going to say that the exchange rate will be one thing or another. You wouldn’t want us to do that, as much as people ask for that. It’s a market determined rate,” Mr. Wynter stressed.
By Athaliah Reynolds-Baker, JIS Reporter