PSOJ comments on F/X decline


PSOJ comments on F/X decline

Says BOJ's economic reform initiatives will help to reduce market volatility overtime

Sunday, November 10, 2019

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The Private Sector Organisation of Jamaica (PSOJ) on Friday moved to comment on the current decline in foreign exchange of which many especially business people have become weary.

In a media release the PSOJ stated that within the last month the Jamaican dollar has traded with increased volatility and has lost ground to its US$ counterpart trading with the weighted average selling rate closing at J$141.89 (a record high) at the end of trading on Thursday (November 7).

With regards to the concerns expressed from segments of the business community, the PSOJ has said that it does appreciate the anxiety that the Jamaican public is having due to the volatility of the currency and the loss in value of the Jamaican dollar and its impact on the business and individuals, of which they have sought to purport some solutions.

The entity said the solution to Jamaica's FX situation is to increase our earning capacity through exports of goods and services and reduce its import bill through import substitution.

“The PSOJ urges the FX Working Committee established and led by the Bank of Jamaica (BOJ) comprising the bankers, cambio dealers and members of the business community to continue its efforts to implement the electronic trading platform and to further develop the forward currency market. Most importantly the BOJ should continue to enhance its market intelligence gathering capabilities and proactive responsiveness to changing market conditions in order to reduce market imbalances which will undoubtedly occur in Jamaica's small open economy,” the release stated.

The entity noted that under the economic reform programme the country has adopted a flexible exchange rate regime which has seen the Jamaican currency moving in both directions, through which the BOJ has been trying to bring transparency and price discovery to the market through several initiatives. These include:

1. The introduction of the Bank of Jamaica Foreign Exchange Intervention Trading Tool (B-FXITT)

2. The implementation of the interim solution, the Bloomberg Trading Portal, pending the rollout of the Electronic FX Trading Platform. This interim solution gives visibility into the market.

3. The BOJ is advanced in the development of the electronic trading platform which will lead to greater transparency to the financial institutions and end users.

4. Efforts are underway to facilitate the further development of the forward market for foreign currency transactions. This initiative needs to be accelerated.

The PSOJ believes these initiatives will help to ease volatility in the market overtime.

“These initiatives should reduce volatility in the market overtime through increased visibility of transactions in the market and will over time will allow for an efficient forward market to hedge positions and reduce the FX risks of the private sector entities and individuals,” the release closed in saying.

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