Low production constrains BOJ’s effort to intervene in foreign exchange market
A senior Government technocrat has declared that the ability of the Bank of Jamaica (BOJ) to intervene more aggressively in the foreign exchange market is limited by the low production levels within the country.
The Jamaican dollar has been consistently trading for more than $100 against its US counterpart since crossing the psychological barrier on June 7, heightening fears of price increases for basic goods and services.
Speaking on the JIS-produced Issues and Answers, the Director-General of the Planning Institute of Jamaica, Colin Bullock, said if Jamaica was producing and exporting the country would be able to earn more foreign exchange.
He says the BOJ would in turn have more freedom to enter the foreign exchange market.
He is also dismissing calls for a fixed exchange rate, noting that a fixed exchange rate without sufficient foreign exchange to meet demand will result in the growth of a black market.
He says a similar experiment, through an auction system, failed in the 1980s.
He says overtime, the rebuilding of BOJ reserves and fulfilment of IMF objectives will restore confidence resulting in relative stabilisation of the exchange rate.
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