Gov’t chided for silence on weakening dollar

[Lazie]

Friday, 06 February 2009

As more alarm bells go off over the massive slide in the value of the Jamaican dollar, the Government is being chided for its silence on the matter.

Financial Analyst, David Wan, said it appears that the administration is quietly watching as the currency quickly loses its value.
"What struck me is that the authorities have remained fairly quiet on this topic and it is moving everyday. The only statement that I have heard recently was from Minister [Don] Wehby who said we have a lot of foreign exchange coming in soon and the dollar may even revalue, that is the quote I heard,"

"But it is very strange to me that we have not had a pronouncement because either they are allowing it to devalue and they are comfortable with it because of the inflation deferential we have had with the US or they are not able to control it," said Mr. Wan.
The local currency has declined by more than 10% against its American counterpart in the last two months.

During trading Thursday authorised dealers were selling the US dollar for a high as $88.80.

http://www.radiojamaica.com/content/view/15370/26/

[Lazie]

Gov’t out of options to stop JA$ devaluation

At least one financial observer believes the Government has run out of options to halt the rapid slide in the value of the Jamaican dollar.
Despite the Government raising interest rates and hiking the cash reserve requirement of financial institutions, the Jamaican dollar continues to lose value against its US counterpart.

Financial Analyst, David Wan, said the Bruce Golding administration is now facing a dead end as far as defending the dollar is concerned.
"The options are fairly limited, it's the interest rate tool they can use or in the past they have used index bonds which without getting into the full details tends to coax people out of their US dollar holding. But I haven't seen that in the very recent past,"

"The interest rate tool is the one that is used to mop us liquidity but hurts the productive sector so there is no easy answer. So I would say those are the two options available and right now the added problem is the international situation," said Mr. Wan.

And foreign currency trading will resume on Friday morning with the US currency being sold for an average $87.72.
It is costing $70.93 for the Canadian dollar and $127.24 for the pound sterling.

http://www.radiojamaica.com/content/view/15368/52/

[Lazie]

Economic stimulus package under threat

Members of the business community are warning that the Government's multi-million dollar economic stimulus package could be jeopardised if the rapid slide in the value of the Jamaican dollar is allowed to continue.
In November Prime Minister Bruce Golding announced a raft of measures to help prop up the business sector which was facing the onslaught of the worsening global economic crisis.

But at least one group of businessmen is warning that the benefits of the stimulus package will be eroded if the depreciation of the local currency is not halted.

Deputy President of the Jamaica Manufacturers Association, Brian Pengelley said business owners are facing new challenges due to the weakening dollar.

"We thought that once we got the concessions that came out of the stimulus package that this would certainly be a step in the right direction and would help to contain costs, custom user fees on capital goods and raw materials were removed, etc.,"

"All of that was going in the right direction. Now that we are seeing these impacts I don't think they are going to work at all for us because the impacts we are seeing now far outweighs the stimulus package," said Mr. Pengelley.

http://www.radiojamaica.com/content/view/15371/26/

[Islandman]

No easy answers? Imagine that.

I guess the not-so-new-anymore JLP government is realising that macroeconomic problems are not as simple to solve as it seems in opposition.

Maybe Omar Davis doesn't look as clueless to them now as he once did?

[Assasin]

you can't compare now to when Omar was in office. Now is serious time.

devalue by 10%? Compare that to Mexico, the UK, Pakistan and others. When the world economy was growing 6% we were devaluing by 10 and 20%.

While the JLP government have to do something, as we see not even the US government at this point knows what to do either. NOBODY expected this kind of waters.

Not even Willi

[Islandman]

The time is different but the problems facing the Finance Minister is not that different.

I am not talking about the overall economy, I am talking about the fiscal and monetary policies used by the government to deal with a financial crisis.

Omar had to deal with a total collapse in the local financial system. That is not a minor issue by any means.

Give credit where it is due, if it wasn't for the systems put in place during the FINSAC era the govt would be under severe pressure to bail out Olint , Cash Plus and everybody else right now.

[Islandman]

Not even Willi? I not sure bout that. I will let him comment for himself but Willi is probably of the view that we just seeing the top of the iceberg right now.

Wait till the next set of adjustable mortgages start reset later this year.

[Mosiah]

Omar had to deal with a total collapse in the local financial system. That is not a minor issue by any means.

Give credit where it is due, if it wasn't for the systems put in place during the FINSAC era the govt would be under severe pressure to bail out Olint , Cash Plus and everybody else right now.

Everybody conveniently figget bout dat.

[Lazie]

No easy answers? Imagine that.

I guess the not-so-new-anymore JLP government is realising that macroeconomic problems are not as simple to solve as it seems in opposition.

Maybe Omar Davis doesn't look as clueless to them now as he once did?

People really a mek reference to Omar? As far as I'm aware a nuh April 1st yet. The fact that when there were good times and our neighbors and economic partners were growing their economies, we were calling 1.5% growth progress. I never heard anyone say there was an easy answer. They've always pointed to a different way of dealing with issues and they're moving in that direction.

[Assasin]

yeah we have to give credit where it is due. The oversights were ok but not great as there is no reason for Cash Plus and Olint to get so big especially when they were not legal entities.

That show that we still needed more oversights.

[Muadib]

LOL !!!

Whoeeii !!

Govt Policy had a hand in the collapse of the financial system.

Big difference I think.

[Muadib]

You must be joking.

Omar Davis could not look anymore clueless and well earned at that.

[Mosiah]

Yeah, revisionist!

[Muadib]

Educate yourself on the matter.

You have no excuse.

[Willi]

Yuh mad,

Things are better than I expected at this stage!

Also, what is this fuss about our dollar. All things nowadays are transitory and can move in any direction. To my mind, the US dollar is structurally in an even worse shape than the JAD!!!!

In any case, all currencies are in a race to the bottom, so as to maintain an edge in a collapsing global economy. The Swiss are in a bind, as no matter what they do, people flee to the franc which is a surrogate for GOLD!

To stave off depression, interest rates will be cut to the bone, but that combined with freed up monetary spigots will lead to hyperinflation. Dangers everywhere...I am just hoping we can steer a relatively painless path thru this minefield.

Times hard, times dread!