Dear Editor,

On Thursday, May 21, 2015, Nationwide carried our governor of the Bank of Jamaica, Brian Wynter, saying that he expects stabilisation of the dollar, and he gave a reason or two. The reasons given did not factor in the law of supply and demand, which states that when demand exceeds supply price tends to rise.

There is no doubt that demand for foreign currency exceeds supply and this situation continues for all the reasons already in the public domain. One that is not so well known is Gresham’s Law, which says that when two currencies are in circulation, the bad money will drive the good money out of circulation. In other words, hoarding of foreign exchange, in our case, will impact supply and consequently price.

Against all this there will be no stabilisation of any foreign currency against the Jamaican dollar until equilibrium is reached, which is not reasonably foreseeable as demand continues to exceed supply.

The tourism industry, which is supposed to be an invisible exporter, must be made to be a real exporter by the employment of natural resources and goods and services locally produced with minimum import content, as it is well known to be the quickest earner of foreign exchange.

Another factor which is missing from the equation is the pending increase in public sector wages. Though long overdue, any wage increase will impact on inflation. It is a well-established fact that a rise in wages result in a rise in prices, and with Government being the largest employer, the impact will be felt in the economy.

Owen S Crosbie

Mandeville, Manchester

oss@cwjamaica.com