Aug 2016 Financial News

Jamaican manufacturers concerned about JA$ slide

Aug 31, 2016

KINGSTON—The Jamaica Manufacturers’ Association (JMA) yesterday expressed concern at the devaluation of the local currency warning it could lead to reduce competitiveness and increase prices for consumers.

“It remains disconcerting that to date, the Jamaican dollar has seen a decline of 5.6 per cent since the start of the year, trading at an average rate of J$127.25 to US$1,” the JMA said in a statement.

The Jamaica dollar Monday closed at J$127.44 to one US dollar, up by eight cents, according to the Bank of Jamaica’s daily foreign exchange trading summary.

The JMA said there was need for clear and decisive measures, making reference to 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 importdependent industries and consumers in the short term.”

The manufacturers noted the sector is one such industry, where 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 JMA said.

The private sector organisation said: “Depreciation will also have an adverse impact on the purchasing power of Jamaican 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’.”

The JMA advised the Andrew Holness 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 Jamaica’s 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,” the JMA said.

Source:
Trinidad Guardian, A19
Wednesday August 31, 2016