PSOJ endorses BOJ's foreign exchange system
The Private Sector Organisation of Jamaica (PSOJ) has applauded the Bank of Jamaica (BOJ) on its move to reduce the surrender amount of foreign currency by five per cent, which it said is estimated to make another US$30 million available to the market on a monthly basis.
It said the Bank’s Foreign Exchange and Intervention Trading Tool (B-FXITT) has brought more transparency to the system and is an improvement from the previous ad-hoc intervention that used to be the norm.
The PSOJ said the new system allows greater predictability of foreign exchange flows, allowing for more precise planning on the part of businesses.
“Complemented by the reduced amounts required to be surrendered, this is a positive step that will allow for more stability in the foreign exchange market,” the PSOJ said in a release.
“Greater stability will hopefully result in a policy focus on inflation targeting and we will not continue to be preoccupied with the foreign exchange rate, which is just a symptom of the underlying problem,” it added.
The PSOJ said it is hoping that the BOJ will continue to further reduce the surrender requirements, as well as look at the reserve ratios to allow for more money to be available to the market, and result in a reduction in interest rates.
“This move by the BOJ provides evidence that a rational and practical approach to regulatory environments can be positive, and it is our hope that the same approach can be applied to the restrictive regulatory environments with regard to pension funds and the insurance industry,” the release said.
PSOJ President Paul Scott noted that “in order for the economy to expand, it is essential for domestic investments to be increased; investments need to be allowed to flow to productive assets if we are to increase our production and GDP (gross domestic product).”
Added Scott: “I would like to congratulate Governor (Brian) Wynter on the initiatives surrounding the FX market, and urge him to continue to take further steps in making the necessary changes to allow our countries’ assets to be put to more productive uses.”