Dear Editor,

Recent public utterances by central bank Governor Brian Wynter, as well as Jamaica Manufacturers’ Association and Private Sector Organisation of Jamaica leaders, Omar Azan and Dennis Chung, about the effect of the Bank of Jamaica’s new “FIXIT” currency (supply/demand) management system, have raised a question or two in my mind.

Wynter spoke about the ongoing positive effect of FIXIT in reversing the hitherto chronic downward slide of the value of Jamaica’s currency in relation to the United States dollar and other foreign currencies. At the same time, he took a thinly veiled jab at unnamed individuals who, he suggested, must have lost millions of dollars recently in “betting against” the Jamaican dollar. This, by speculating that the Jamaican dollar would continue its one-way slide, even with the presence of FIXIT, thus enabling them to gain windfall profits on their foreign currency investments, especially in buying and selling US dollars.

But while agreeing with Governor Wynter that there was heightened pressure on the Jamaican dollar, even with the central bank’s intervention in the market with FIXIT, Messrs Azan and Chung expressed the view that central bank “interference” in the foreign exchange market, even under FIXIT, will not bring a permanent solution to the issue of Jamaica’s hitherto ever-downward-sliding dollar, but will be a continuing cause of the problem.

There should be little or no “interference” by the central bank in a “free” currency market, but the currency(ies) should be allowed to find their own “equilibrium”.

Here, then, are my questions, for Governor Wynter, and for Messrs Azan and Chung:

(1) Is there a role in the foreign exchange market, or in foreign exchange management procedures, for unofficial/private speculators? Should the central bank and the Government allow unofficial, private, and totally self-interested speculators free rein to influence the market, and be influenced by negative rumours, etc, regardless of what else is happening in the economy and/or what else might be true?

(2) And what about the role and effect of increased and/or increasing economic growth and favourable import/export and foreign exchange earning performance?

C Anthony

carltongor@gmail.com