Leonardo Blair, Staff Reporter
THE TUG-O-WAR between the Bank of Jamaica (BoJ) and speculators over the value of the Jamaican dollar has left several sector leaders and ordinary Jamaicans in jitters.
They are predicting price hikes and job cuts if the dollar slide is not contained. Although Earle Harriott, an executive member of the Cambio Dealers Association of Jamaica, said there is no reason to panic, he admitted the situation was "cause for concern".
Speculators rushed to acquire the United States dollar in some sections of the foreign exchange market as the Jamaican currency broke the $60 to US$1 mark at the end of last week.
Several traders in the currency, however, held on to their foreign dollars in hopes of later cashing in at a higher price, forcing the BoJ to intervene Friday to slow the blistering pace of devaluation which saw the dollar losing $2.08 in value.
"The demand for the US dollar has been aggressive (last week)," said Noel Greenland, communication manager at FX Traders. "As the dollar devalues, more people are seeking to buy but I can't tell you how much more." According to the head of one investment company in an interview with The Sunday Gleaner, there was a huge fall in the supply of U.S. dollars on the market last week which resulted in the rapid devaluation.
"On a normal trading day there is usually US$25-US$30 million on the market but in the last week the supply was about US$15-US$20 million," he explained.
NOT STRANGE
But Mr. Harriott, while admitting that the scarcity of the U.S. dollar and the devaluation of the Jamaican dollar were "cause for concern", said, "it (devaluation) is not a strange phenomenon." He said, "People tend to hold on to the U.S. dollars that they have in times like these. Anytime the dollar starts to weaken, people are hesitant to sell their U.S. dollars."
Executive director of the Jamaica Employers Fede-ration, Jacqueline Lloyd, also pointed out to The Sunday Gleaner that if the dollar is allowed to devalue too far, she foresees several negative repercussions.
"We foresee job cuts, longer salary negotiations and more cases coming before the Ministry of Labour and the IDT (Industrial Dispute Tribunal)," she said.
And as far as she sees it, "We can't deal with any more job cuts as we already have an unemployment problem."
Just last month, the Jamaica Manufacturers' Association (JMA) said some of its members had decided they could no longer hold strain and would be forced to increase prices because of the weakening currency.
PRICES GOING UP
In the petrol industry, Lloyd Brown, president of the Jamaica Gasolene Retailers Association, said, "Things are getting tighter and if the dollar continues to slide, then that will also help to push the price up."
The Jamaica Chamber of Commerce (JCC) said the depreciation in the exchange rate has already brought about increased prices of commercial goods, which were already being passed on to consumers, but it was just the beginning of the price movements.
"It (devaluation) is a concern in the manufacturing sector," said JMA president, Clarence Clarke. He ex-plained that some investors have also expressed concern that the costs to service their U.S.-dollar loans were mounting every day because of the continued devaluation.
Michael Ammar, Jnr., the JCC president, said, "Prices have already started to go up."
Despite the scarcity of the U.S. dollars in some quarters, however, Dunstan Whitting-ham, general secretary of the Jamaica Vendors', Higglers' and Markets Association, explained that the members of his group had no problem sourcing U.S. dollars. But he said, "It is now costing some $60,000 to pay for US$1,000 and it is causing some problems for some persons. It (devaluation) really has a side-effect."
BREAKING $60 BARRIER
The Jamaican dollar cruised through the $60 to US$1 barrier in trading on Thursday, losing 75 cents in value.
The average selling rate was $60.09 to the U.S. dollar, preceded by a rate of $59.34 last Wednesday, which was down 47 cents from the Tuesday rate. The currency lost $2.08 in value as against a loss of $1.16 the previous week, in trading against the U.S. dollar.
To the Canadian dollar, the average selling rate of the local currency was $42.42. An average selling rate of $95.71 was obtained in trading against the British pound.
The exchange rate fell as low as $61.95 to the U.S. dollar during trading on Thursday. Since the start of the year, the Jamaican dollar has lost $9.12 in value against the US currency.
