Nov 2016 Financial News

IMF contradicts BOJ, says Jamaican dollar still overvalued

Nov 18, 2016

The International Monetary Fund (IMF) has contradicted the Government and senior technocrats about the value of the Jamaican dollar in relation to the US currency.

In its latest country report on Jamaica, the IMF said the Jamaican dollar is modestly overvalued.

However, at his quarterly press briefing on Monday, Governor of the Bank of Jamaica, Brian Wynter had reiterated a statement he first made on November 15 last year that the Jamaican dollar was now fairly valued.

On Tuesday, however, the IMF said although the exchange rate is now broadly in line with Jamaica's economic reform programme, its modest over valuation presents some risks.

It's now costing just over $129 for US$1.

According to the IMF, a more depreciated exchange rate would help the country to get a more sustainable international investment position largely influenced by the size of the debt.

Meanwhile, the BOJ Governor says the Jamaican dollar has depreciated by 5.9 per cent for the fiscal year 2016/17.

The opposition spokesman on finance, Dr Peter Phillips, has said given the IMF's contradiction of the BOJ, the Government needs to provide clarity.

Traditionally, it's argued that depreciation leads to increased cost of imports but the IMF has maintained that such a typical view may not work for small countries like Jamaica with a high reliance on imports and other factors.

Source:
Jamaica Gleaner
Friday November 18, 2016

http://jamaica-gleaner.com/article/news/20161118/imf-contradicts-boj-says-jamaican-dollar-still-overvalued