BOJ needs to regulate FX market
THE EDITOR, Madam:
The dollar is now hovering at US$1 to J$142 and already the president of the Jamaica Manufacturers and Exporters Association, Richard Pandohie, has come out to say that prices of manufactured goods will be adjusted to a band in the region of US$1 to J$142-145 in the short term.
The Bank of Jamaica (BOJ) governor has stated that the spike in the cost of the dollar is caused by major trades being carried out by at least one player in the financial sector. This is a familiar tale, and the rest of the society, including the labourer, household helper, teacher, and, in general, fixed-wage workers have been ravaged in the process year after year.
The Government defends this scenario, arguing that its inflation -targeting strategy will now smooth out the cost-of-living imbalances. At this point in time, the unstable dollar has seemingly trumped the strategy.
I will not argue the merits and demerits of the inflation-targeting strategy at this time.
What I will argue is that the market is currently biased towards these big financial players and their shareholders at the expense of the hundreds of thousands of fixed-wage earners.
It is clear that the BOJ now needs to put in place regulations to prevent this kind of disruption in the foreign exchange market that benefits these financial institutions that make these huge gains at the expense of the voiceless and often-disenfranchised majority.
An unregulated foreign exchange market is fine in theory but even Wall Street, which hosts the world’s financial capital, regulates its financial markets with aggressive oversight and intervention when required.