When will the dollar stop sliding ?

The Jamaican dollar will continue its rapid depreciation and this will NOT end until its cheaper to produce products here in Jamaican vs importing the same product from outside of Jamaica..

The question is, do you see that happening anything soon, given the PNP is expected to win the next elections and the fact that once they are in power the dollar moves as fast as the concord.

So the question of when the dollar will stop sliding is really in the hands of the Jamaican people, its our choice.

The maths is very simple and here is how it goes.

1. Let’s say one can on imported canned beef cost $200 .00
2. Let’s say once can of locally produced canned beef cost $220.00
3. The local beef cost 10% more to purchase vs the imported beef and the consumer strapped for cash would tend to purchase the less expensive item.
4. Now it will take at current rates, lets say  US$1.50  to pay for each can of that imported product.
5. The importer has to purchase those US$ to allow him to import these items and he has to bid for those US$ like other importers.
6. If there is a shortage ( as there always is) of US$ , then bidders will move to  outbid each other for the dollar and the highest bidder wins.
7. This process keeps pushing up the dollar higher and higher and it will NOT stop until equilibrium is reached not before ie when supply equals demand.
8. Now we know Jamaica has  huge trade deficit with each of its trading partners and until this has been cut significantly or we by some miracle find oil, gold, rare earth metal, lng or something of the sort to earn more US$, then we can continue to expect the slide to continue.

So where the dollar will end up is anyone’s guess.

What we need to do as part of the process of slowing the thing down is to cut back on purchase of imported goods. Importers DO NOT import anything that does not sell and if we stop buying they will have no choice but to stop importing thus there is no need to go in search of US$ for those items.

I believe the dollar will stop when imports are way to expensive for us to purchase and no time before that. Given the current trajectory that we are on, that won’t happen for a looong time.