KINGSTON–Gov­er­nor of the Bank of Ja­maica (BOJ) Bri­an Wyn­ter has down­played con­cerns about the de­pre­ci­at­ing Ja­maican dol­lar. He said the cen­tral bank had an­tic­i­pat­ed the present ex­change rate and its im­pact on prices.

The Ja­maica dol­lar, which broke the J$100 to US$1 thresh­old, has since dropped to its low­est, trad­ing for J$100.78 to US$1.

Wyn­ter how­ev­er said that the de­pre­ci­a­tion "falls with­in the Bank of Ja­maica's ex­pec­ta­tions and this lev­el of the ex­change rate and its po­ten­tial im­pact on prices in the econ­o­my is al­so with­in the bound­aries of what we were fore­cast­ing".

He said that kind of ex­change move­ment is ben­e­fi­cial to those seek­ing to pen­e­trate ex­port mar­kets as it gives them a price ad­van­tage. How­ev­er, a close watch must be kept on the po­ten­tial fur­ther im­pact on prices in the do­mes­tic econ­o­my.

"It is a chal­lenge for a mar­ket-dri­ven ex­change rate en­vi­ron­ment but the ques­tion we have to tack­le is whether we are fo­cused on mak­ing sure that pro­duc­ers who com­pete in a very com­pet­i­tive ex­ter­nal en­vi­ron­ment have the ad­van­tage or whether we are go­ing to seek to pro­tect con­sumers in Ja­maica who are con­sum­ing the pro­duc­tion from pro­duc­ers over­seas," Wyn­ter said, adding that the right bal­ance has to be found for the ex­change rate.

"If you have a strong ex­change rate that ben­e­fits the con­sumer, that is go­ing to make it pro­gres­sive­ly hard­er for ex­porters to com­pete in over­seas mar­kets. If you go the oth­er route and have a too weak dol­lar you will re­verse that pic­ture but al­so have too much in­fla­tion in the do­mes­tic econ­o­my," he said. "We have to find the right bal­ance and the pro­gramme we are op­er­at­ing with­in at the mo­ment is built on a bal­ance that will best pro­vide the con­di­tions for ex­port-led growth," he added.

Wyn­ter was not will­ing to pre­dict how much fur­ther the dol­lar is like­ly to de­pre­ci­ate, de­spite some an­a­lysts sug­gest­ing that it could reach as high as J$110 to US$1 in the very near fu­ture. In­stead, he not­ed that Ja­maica was op­er­at­ing un­der a flex­i­ble ex­change rate regime to which the cen­tral bank is com­mit­ted.

He said a crit­i­cal func­tion of the BOJ is to con­tain in­fla­tion and pre­dict­ing out­comes of the lev­el to which the dol­lar would de­pre­ci­ate would de­feat the pur­pose.

"There­fore, we have to be care­ful about cer­tain­ly not in­di­cat­ing the like­li­hood of any giv­en ex­change rate. The BOJ is not go­ing to say the ex­change rate will be one thing or an­oth­er; it is mar­ket de­ter­mined," Wyn­ter said.

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