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Historic: US$1 now selling for J$120

Published:Friday | December 4, 2015 | 12:00 AM

It is now costing a historic J$120 to buy US$1, latest Bank of Jamaica figures show.

At the close of trading today, it cost an average $120.03 to buy US$1.

The Jamaican dollar has fallen from $99.33 to US$1 on May 1, 2013, when Jamaica signed a loan agreement with the International Monetary Fund (IMF) which has stressed the importance of devaluation.

IMF chief Christine Lagarde, had said the Jamaican currency was overvalued and had to endure further re-valuation although she did not indicate the acceptable level.

But last month, Bank of Jamaica Governor, Brian Wynter declared that the Jamaican dollar is no longer overvalued and therefore less susceptible to unpredictable depreciation.

The Opposition Jamaica Labour Party and some manufacturers have campaigned against devaluation, saying it will result in increased cost of imports which would limit economic growth.

In a report in September, the IMF argued that analysis of quarterly exchange rate data for Jamaica from 1996 to 2014, showed that "real depreciation (against the US dollar) of 10 per cent is associated with around 0.5 percentage point increase in economic growth."

It added that in the short run, temporary shocks may affect growth, but in the long run, a more depreciated Jamaican dollar will co-exist with higher output levels.