J$ slide 7th highest in Americas, says UN
JAMAICA recorded the seventh highest currency depreciation in the Americas based on its double-digit currency slide, according to a United Nations (UN) body report.
Most of the region's 35 nations underwent currency depreciation against the US dollar, but the report blamed domestic issues for the higher pace of the slide in Jamaica.
"In Argentina and Jamaica the reasons were domestic, as they were in the Bolivarian Republic of Venezuela," stated the report entitled Economic Survey of Latin America and the Caribbean 2014. "The Jamaican dollar depreciated during the period, against a backdrop of low economic growth, a major fiscal adjustment and relatively low levels of international reserves."
The report was published by the Economic Commission for Latin America and the Caribbean (ECLAC), which represents the UN on economic and social issues throughout the region. It acknowledged that the currency was impacted by targets set by the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) with the Jamaican Government.
"This deterioration of the currency occurred despite the signing of the EFF as there was lingering uncertainty about the economy. While depreciation may enhance competitiveness in some sectors, it placed pressure on the Bank of Jamaica to intervene to prevent too large a deterioration of the currency," stated ECLAC.
For 2014, it predicts slim growth of 1.2 per cent based on stronger sector performances in mining and quarrying, agriculture, forestry, fishing, construction, hotels, and restaurants.
The report avoided ranking the depreciation of the Venezuelan currency, as the South American country operates "three official exchange rates at very different parities" since 2014. One rate recorded a near two-thirds depreciation against the dollar year on year.
"At the time of writing, this rate stood at 10 bolívares to the dollar, approximately 60 per cent higher than the official exchange rate of 6.30 bolívares to the dollar," stated the report in its section on Venezuela.
Eleven other countries recorded depreciation in excess of 5.0 per cent over 12 months to March 2014 led by Argentina at 53.9 per cent, Chile at 19.4 per cent, Uruguay at 19.1 per cent, Brazil at 16.3 per cent, Colombia at 10.2 per cent, and Jamaica at 10 per cent, according to the report.
In fact, the Jamaica dollar depreciation now stands closer to 13 per cent over 12 months ending July, which could see it surpass Colombia.
Trinidad and Honduras, however, recorded currency appreciation over the period.
In June, Christine Lagarde, managing director of the IMF, described the Jamaica dollar depreciation as painful but necessary to achieve competitiveness and restore dignity. She indicated on a two-day visit to the island that the currency was overvalued supported by bleeding the reserves.