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Wynter not worried... Says BOJ expected currency movement

Published:Friday | June 14, 2013 | 6:00 AM
Brian Wynter, Governor of the Bank of Jamaica.File

Gary Spaulding, Senior Gleaner Writer

Governor of the Bank of Jamaica Brian Wynter yesterday appeared unperturbed by the recent depreciation of the local currency that sent the Jamaican dollar crashing to a new low on the foreign exchange market, triggering some measure of consternation through sections of the country.

Addressing journalists at a Jamaica House press briefing yesterday, Wynter said he understood the consternation of sections of the populace as the dollar eased past the J$100 to US$1 mark, but suggested that the dollar was finding its true value in a market-determined environment.

"We in Jamaica are operating a flexible exchange rate regime that is determined by the market and that is based on the principle that is determined by the market," Wynter stressed.

Wynter signalled that he was unruffled as the movement of the local currency was consistent with the expectations of the Central Bank, operating under a flexible exchange rate regime, to which the Central Bank is committed. "The exchange falls within the boundary of the BOJ's forecast," asserted Wynter.

The Central Bank governor refused to be drawn into predicting the levels of likely depreciations, saying this would defeat the mandate of the Central Bank to marshall and contain inflation that is conducive to growth.

"The BOJ has as its mandate to contain inflation and price stability, therefore, we have to be careful not to indicate the likelihood of any movement in the exchange rate so BOJ is not going to say whether the exchange rate will be one thing or another," he stressed.

As he moved to allay public concerns, Wynter emphasized that recent depreciations must be placed in context. "The levels of the exchange rate may not be comfortable to some, while it may be something else for somebody else.

"So the value of a market-determined exchange rate is that it represents at any given point, the rate of compromise between buyers and sellers."

Wynter also warned against characterising as a slide the most recent movement of the value of the dollar compared to late 2012.

He stressed that the BOJ remained sceptical of the existence of a black market as there was no evidence to suggest this.