Shaw Says Fixed Exchange Rate Would Cause Serious Repercussions

Minister of Finance and the Public Service, Audley Shaw, has said that a fixed exchange rate policy, in the midst of the current foreign exchange shortage, could cause serious repercussions and, therefore, is not being considered by the Government.
Speaking at the 2009 Kingston Money Expo, hosted by Today’s Money Limited, at the Hilton Kingston Hotel, New Kingston, on Thursday (Feb. 19), Mr. Shaw said that what has to be done, is to keep the market driven system within a liberalized economy and exchange rate regime, and do what can be done through the central bank.
“We are not earning enough foreign exchange. We had projected to earn $6 billion in revenue this year, and its down, almost by half. So foreign exchange earnings are also down,” the Minister admitted.
He said that demands are increasing, while earnings are on the decline. But, a fixed exchange rate would not solve the fundamental issue, which is that enough foreign exchange is not being earned.
He noted, however, that there has been a revaluation of the Jamaican dollar for the past week, from 88.80 to 88.26 yesterday (Feb. 18).
“When we disaggregated it, and looked at some of the demand impulses, we found that some of our own public sector bodies were out there in the market, competing for dollars, driving up the exchange rate. So, I instructed the Bank of Jamaica to rope them in, and let us have a proper cash flow projection of their requirements and have some order in the system.,” he said.
He said that cambio dealers, banks and building societies have been included in the discussions, and have been cooperating.
“Everybody is coming together now, cooperating with the Bank of Jamaica, to see if we can just hold the line on the exchange rate,” he added.