After a couple years of relative stability in the local currency vis a vis the US$, all that is about to change, with a number of our noted analyst predicting a slide in the value of the $J vs the US$. I should add further slippage in the $J vs the $US since the slide has already commenced.
So the big question is , what has changed. What fundamentals have changed why our local analysts are predicting a devalution of the $J after over two years of relative stabilty.
Why would this occur given that we have seen 4 qtrs of economic growth and the BOJ predicting further growth in the upcoming quarter, this is rather puzzling indeed.
The USA economy is on the verge of recovery, but given the predictions of our local analyst, Jamaicans can expect to see, inflation rising as prices increase due to the dollar slippage. Merchants who are watching the news will further exacerbate the problem by forward purchasing of the US$ and begin pricing goods based not on current rate, but on a rate they anticipated the local currency will be at when their imports hits the local shores.
This is certainly not the kind of news one would be looking towards given the plight that many Jamaicans face today from a economic front. If one should add the growing crime problem , the dismal job prospects and the ever rising fuel prices it paints a rather gloomy picture ahead for us.
The GOJ is working on a “new” IMF standby agreement, is devaluation of the local currency a condition of this deal? We are expecting an update from the Finance Minister ( err de facto Prime Minister) this week and we certainly hope he sheds some light on this rather disturbing development .
We certainly hope the analyst are wrong because this scenario I have painted above is the last thing Jamaica needs at this point in time.
Contrary to what many bloggers think I not anti-PNP nor do I want the GOJ to fail, the way I see it, is I will continue to highlight the short comings of the government of the day, pretty much like I did under the former government. I will not hide the facts, I will continue to call it as I see it, because if we are going to move forward as a country we must be prepared to hold our leaders accountable rather than treating them as “Gods”.
No leader is above criticism and I will be unrelenting in my crusade to present information on this and other blogs, that brings out the facts and or my personal view on issues I see that are worthy of commentary.
Filed under: Economics, Finance | 4 Comments »