THE Opposition People’s National Party (PNP) has renewed its call for the central bank to give a clear explanation of its interventions in the foreign exchange market, questioning whether the bank is deliberately weakening the Jamaican dollar.

Yesterday, Opposition spokesman on finance, Mark Golding said the Bank of Jamaica (BOJ) should give reasons for its actions in the foreign exchange market since April this year, which has resulted in depreciation of the dollar by more than six per cent, to a record low average selling rate of $135.44 to one US dollar on July 31.

Golding said the Opposition also wants to know why the inflation target was set at four per cent for this financial year, and whether the local currency was “deliberately depreciated” by the market actions of the BOJ because of failure to meet that inflation target.

“Repeated platitudes about the normal interaction of supply and demand in setting the price of the US dollar in a free market are not helpful, and do not explain why the BOJ was buying aggressively in a tight market and depreciating the currency by over 6% in three months at a time when Jamaica is substantially ahead of its reserves target,” Golding said in a release.

He said the Opposition wants to know whether one of the main reasons behind the slippage of the currency has been the bank’s inflation target of four to six per cent for the 2018/19 fiscal year, pointing out that this target is not being met, as inflation for January to June was negative 0.3 per cent.

Furthermore, the Opposition said it noted reports of some discord between the central bank and technocrats of the the Ministry of Finance over the level of the inflation target, and that the BOJ had “prevailed” in the disagreement.

“However, the basis for this inflation target has not been explained to the public,” the Opposition spokesman said.

He added that in the absence of clarity from the central bank, its aggressive buying in the foreign exchange market is being explained by some as aimed at pushing up inflation.

“There are suggestions that this may have been encouraged by the IMF, as two critical measurements in the IMF (International Monetary Fund) programme apply to nominal Gross Domestic Product, which is improved by inflation. Such speculation should be put to rest by clear and open policy communication by the central bank,” the Opposition spokesman said.

In May, at the central bank’s quarterly press briefing, BOJ Governor Brian Wynter said the 3.2 per cent rate of inflation recorded for April 2018 fell below the target range of four to six per cent. He explained that the reduced rate of inflation was due mainly to the sharper-than-anticipated decline in agricultural prices since January 2018, reflecting a recovery in the sector’s output.

The BOJ in its quarterly monetary policy report for January to March said core inflation, however, remained low and stable at less than 3.0 per cent, suggesting that demand conditions within the economy over the last four to five quarters were restrained in the context of continued fiscal consolidation.