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Trinidad businesses buying forex in Jamaica - JMA

Published:Friday | November 18, 2016 | 12:00 AMSteven Jackson
Metry Seaga, president of the JMA.
Brian Wynter, governor of the Bank of Jamaica.

Trinidad businesses are buying US dollars in Jamaica and creating additional demand for the currency, according to the president of the Jamaica Manufacturers' Association (JMA).

Metry Seaga said the purchases are happening at an alarming rate, at a forum he moderated between JMA members and the Governor of the Bank of Jamaica, Brian Wynter, at the JMA headquarters on Wednesday.

"It seems to me that we are having an issue now, where Trinidad companies in Jamaica and even those who are not, are having an issue where they cannot get US dollars to buy in Trinidad because of the fixed rate or nearly fixed rate there, and the government has dried up all the US dollars available," said Seaga.

"What we have found happens and we have first hand instances throughout our membership is that those companies are having their Jamaican affiliates buy dollars in Jamaica, creating a demand for it that doesn't exist in Jamaica. And it is happening at an alarming rate," the JMA president added.

In Trinidad, amid complaints of a shortage of foreign currency by businesses, the central bank issued a warning earlier this year that black-market transactions are an offence and punishable by fines or the possibility of jail terms ranging up to five years.

Seaga's assertion at the forum suggests that Trinidad businesses are looking beyond their own market to their neighbours to acquire US dollars.

But Wynter told Seaga he was unaware that Trinidad companies were using the local economy in such a way. Still, the central bank chief also signalled that if it were happening, he would not be worried by it, saying Jamaica remains open for business.

"I think this is a good thing," responded Wynter. "I am not sitting here saying I want you to do it or whether you should do it. I am saying that you are free to do it," Wynter commented.

"We have the wherewithal to manage it. Jamaica has reached a position of strength," he said.

Wynter said Jamaica is able to handle increased pressure on the foreign exchange market, as the Jamaican Government has reduced its fiscal imbalances.

"It is a complete transfor-mation," he declared, "I cannot overemphasise it - it is just that it is not glamorous or easy to see."

"But speaking from the work that I do, it is the best kind of change that you could want - to making this country more stable and capable to respond," Wynter said.

The forum was convened to address concerns of manufacturers regarding the pace of decline of the Jamaican dollar and implications for the cost of doing business.

As of Wednesday, the JMD had depreciated 7.19 per cent year to date.

Wynter said at his quarterly press briefing on monetary policy on Monday that the local currency was fairly valued.