Thu | Aug 17, 2017

No shortage of foreign exchange despite sliding dollar - Shaw

Published:Wednesday | May 25, 2016 | 5:46 PM
Shaw: “The faster pace of depreciation in recent weeks has been driven predominantly by large portfolio-related transactions and is not reflective of a deterioration in underlying economic fundamentals or confidence.”

Declaring that there was no shortage of foreign exchange in Jamaica, Finance Minister Audley Shaw today said the Bank of Jamaica will be maintaining a presence in the market until conditions driving the slide in the value of the Jamaica dollar settle.

In closing the Budget Debate, Shaw acknowledged what he called the noticeable increase in the pace of depreciation of the Jamaican Dollar since mid-April 2016.

However, he said it was not because of a weakening economy.

“The faster pace of depreciation in recent weeks has been driven predominantly by large portfolio-related transactions and is not reflective of a deterioration in underlying economic fundamentals or confidence,” he said.

Shaw said the Bank of Jamaica has assessed that underlying fundamentals remain positive.

“For FY2015/16, the current account deficit of the balance of payments is estimated to have been 2.2 per cent of GDP and the Bank of Jamaica’s forecast is for it to remain within the range of 2.0 per cent to 3.0 per cent of GDP in FY2016/17,” he said.

Shaw said a current account deficit at these levels is sustainable and when taken together with foreign direct investments of 5.8 per cent of GDP in FY2015/16 and 5.6 per cent of GDP projected for FY2016/17, Jamaica is earning on a current basis what it needs in order to pay for its imports.

He also said the country’s international reserves have remained healthy and continue to exceed benchmark levels.