KINGSTON, Jamaica — Minister without portfolio in the Ministry of Finance and the Public Service Fayval Williams says the two main factors contributing to the depreciation of the Jamaican dollar against the US dollar are the debt restructuring of companies and an increase in imports, which simultaneously create a higher demand for the foreign currency.

Responding to journalists at this morning’s post-Cabinet press briefing, Williams said companies with US dollar debts are examining their debt structure as interest rates reduce locally.

“As rates converge in the local market it is advantageous for them to change out those US dollar loans into Jamaican dollar loans, which is excellent… as it reduces the risk to companies of foreign exchange exposure. But, in executing these transactions, what actually happens is that the companies have to go in the market to buy the US dollar to repay the loan and that causes increased demand for that,” explained the minister.

She also noted that Jamaica is importing more than it did last year, pointing out that data shows mineral fuels, machinery and transport equipment, chemicals, manufactured goods and food leading the increase in imports.

“The economy is growing; we need to import more in terms of input into the production process,” Williams said.

She reasoned that due to these two phenomena, there is a greater demand on the currency and reminded that “we are in a period in which the currency is going to fluctuate”.

There have been concerns about the depreciation of the Jamaican dollar in recent weeks despite the Bank of Jamaica and the Government insisting that the situation will normalise.

The Jamaican dollar continued to lose value yesterday, trading at J$134.05 against the US currency.