Monique Grange, Assistant News Editor
The Gleaner/Power 106 News Centre
Financial Analyst Collin Steele says Jamaica has not exhibited the fiscal discipline needed for the implementation of a fixed exchange rate.
Yesterday, Former Prime Minister Edward Seaga renewed his call for the Jamaican dollar to be pegged to the US currency.
However, Steele said while a fixed exchange rate would force discipline in economic management and eliminate speculation, there are also disadvantages that could have implications for the country’s balance of payment.
Steele said the country would first need to dramatically improve its current account deficit before such a move is considered.
He said having a fixed exchange rate could also result in budget cuts or a freeze in public sector salaries.
In the meantime, President of the Micro, Small and Medium Enterprises (MSME) Alliance, Dr. Rosalea Hamilton is recommending that a study be done before the government considers pegging the Jamaican dollar to the US currency.
She said a careful analysis also needs to be done on the relationship between a fixed exchange rate and the desired outcomes.
Dr. Hamilton said the slide in the Jamaican dollar over recent weeks could have implications for small businesses, especially manufacturers who rely on imported inputs.
On the other hand, she said the devaluation of the Jamaican dollar also encourages small businesses to export more.
In recent weeks, the US dollar has been selling for over J$88 to US$1.00.