No shortage of foreign exchange — ShawWednesday, September 21, 2016
KINGSTON, Jamaica (JIS) – Minister of Finance and the Public Service Audley Shaw says there is no shortage of foreign exchange in the market.
He was speaking during the sitting of the House of Representatives on Tuesday.
Minister Shaw said the depreciation of the Jamaican dollar in recent weeks has triggered some legitimate concerns by local businesses given that Jamaica has, according to the International Monetary Fund (IMF), achieved a broadly competitive exchange rate against its major trading partners.
The value of the Jamaican dollar has depreciated by 4.8 per cent for the financial year to date compared with a depreciation of 3.2 per cent for the same period last year.
The value of the Jamaica dollar against the United States (US) dollar was J$127.90 on September 16.
“Based on the available data, Bank of Jamaica (BOJ) has indicated that the recent movements (approximately 0.5 per cent per month) are more or less in line with its expectations,” Shaw told the House.
He noted that the higher-than-expected fiscal year-to-date depreciation reflects the excessive movement of 3.6 per cent that took place during the June quarter when unusually large capital account transactions occurred.
He said that additional demand during August correlates with increased private-sector credit expansion and a surge in imports as reflected in customs data from the ASYCUDA system.
Minister Shaw informed that the BOJ met the increased demand with active intervention sales to the FX market.
“It should be noted that the main recipients of intervention flows were in the manufacturing, distribution and energy sectors,” he pointed out.
He emphasised that with the country’s current gross international reserves, which at September 16 was US$3.077 billion, Jamaica is able to cover 25 weeks of projected imports of goods and services.
The Net International Reserves (NIR) also, at US$2.524 billion, is significantly in excess of the BOJ’s NIR target of US$1.835 billion set for end-September.
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