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JCC warns continued slide in $J will increase inflation, damper investments

Published:Friday | May 20, 2016 | 9:54 AM

The Jamaica Chamber of Commerce (JCC) is raising concern about the increase in the rate of devaluation of the Jamaican dollar warning that it will impact economic growth if continued unchecked.

It is also demanding that the Bank of Jamaica plays a more active role in the management of the exchange rate including direct intervention to halt a further slide.

"It could contribute to an erosion of confidence, which could in turn contribute to further devaluation, increased inflation and prove to be a damper on investments," a JCC spokesperson said in a release.

At January 1, 2016, the average rate was US$1 to J$120.24.

At May 19, 2016, is was US$1 to J$125.33 – a 4.2 per cent decline since the beginning of the year.

According to the JCC, for all of  2015, the decline was 4.2 per cent with the dollar declining from US$1 to J$115.32 at the beginning of January to J$120.24 at the end of the year.

"In light of the fact that our inflation rate has been below three per cent for the twelve-month period ending on May 19, 2016 and our Net International Reserve [is] a healthy US$2.4 billion, there seems little apparent reason why the pace of devaluation has increased," the JCC spokesperson said. 

The JCC also said May is not traditionally, a month characterised by high demand for US dollars by the Jamaican private sector.