Date: August 30, 2016
KINGSTON, Jamaica — The Jamaica Manufacturers’ Association (JMA) today decried the ongoing devaluation of the Jamaican dollar against the US currency, which it said is increasing the cost of locally produced commodities and reducing their competitiveness.
Yesterday, the dollar ended trading at $127.44 to one US dollar, up by eight cents, according to the Bank of Jamaica’s daily foreign exchange trading summary.
JMA, in a release today, said it is also concerned about the adverse effects that could ensue if clear and decisive measures are not taken to stymie the impact.
“It remains disconcerting that to date, the Jamaican dollar has seen a decline of 5.6% since the start of the year, trading at an average rate of J$127.25 to US$1” the association said.
It explained that the impact of a currency’s gyrations on an economy is far-reaching, for both consumers and businesses. “While it has long been posited that real depreciation will stimulate exports, a move yet to be manifested in the Jamaican context, what is clear is that it affects import dependent industries and consumers in the short term,” JMA expressed.
The manufacturing sector was noted as one such industry, where, according to JMA, locally produced commodities are becoming more costly and less competitive due to raw materials being sourced overseas.
“While businesses will take measures to reduce the risk posed from fluctuations, such measures will only temporarily mitigate the adverse effects of fluctuations and will prove ineffective in the long term” the association said.
It also sated in the release that: “Depreciation will also have an adverse impact on the purchasing power of our consumers, leaving households with less disposable income and also affecting our oil import bill and subsequently electricity rates. If allowed to continue unimpeded, it may fuel speculation, resulting in a loss of business and consumer confidence that does nothing to inspire investment. What is evident is that there must be a discontinuance of ‘business as usual’.”
JMA advised the Government to reopen the dialogue on the exchange rate regime most suitable for effective currency management at this juncture, and review the current methodology to suit the goals of our macro-economic policy and the economic objectives we want to achieve.
“We are fully signed on to the fact that we must not only grow our domestic economy but we must also increase our exports substantially. As business people, what we need is a stable dollar and predictability to expand, compete, and create jobs to ultimately grow the economy,” JMA said.