MINISTER of Finance and the Public Service Audley Shaw says the Bank of Jamaica will continue to closely monitor the issues which led to the most recent devaluation of the Jamaican dollar.

“My information is that all the foreign exchange that is required is now available. The Bank of Jamaica has intervened and will continue to do so until all the issues are resolved,” Shaw told the Jamaica Observer yesterday.

His remarks followed the revelation by Bank of Jamaica (BOJ) Governor Bryan Wynter that the slide was primarily due to local investors holding on to US dollars for “specific financial account transactions”.

Wynter conceded at a quarterly BOJ press briefing, at the bank’s downtown Kingston headquarters, that there has been “a noteworthy pickup in the pace of exchange rate depreciation since the middle of April”.

At January 1 this year, the average rate was US$1 to J$120.24. Yesterday it was US$1 to J$125.42.

Wynter told the briefing that the exchange rate depreciated by 0.9 per cent in April, and so far in May by 1.8 percent.

“This rate of depreciation is excessive and is not supported by the prevailing economic conditions,” he said.

He noted that the BOJ stepped in to plug the haemorrhages, selling some US$158 million to the foreign exchange market between April 28 and May 20, in an effort to stem the slide.

Wynter said that this was the biggest-ever intervention by the Bank into the foreign exchange market.

“It is our expectation that these actions, combined with the economic conditions that I have described, will restore calm to the foreign exchange market in the near future,” he said.

He diagnosed that the slippage was due to pressures in the foreign exchange market since April, which appears to have been influenced by specific financial account transactions and their impact on market pricing.

“The most significant of these appears to have been the prospect of a large US dollar bond issue in the local capital market by a foreign financial institution. This stimulated additional demand for foreign exchange and influenced expectations of further depreciation,” he explained.

Wynter was, however, confident that the BOJ had enough resources to restore normality to the foreign exchange market.

He said that the BOJ had sufficient resources to manage the turbulence, and noted that the slide had already stopped.

“We have the capacity to act and we are acting now,” Wynter told the briefing.

Wynter also stated that he did not expect the new tax measures to derail the bank’s inflation target of between 4.5 and 6.5 per cent this fiscal year.

“The tax on fuel, the $7 per litre, has a direct impact of something of the range of 0.2 percentage points added to the inflation number. But as I say, you’re seeing a decline from other forces, so that’s why I am hesitating to give a raw number,” he said.