BOJ continues to chase Jamaican dollars

[Lazie]

The Bank of Jamaica will be offering another two variable rate Certificates of Deposit aimed at taking cash out of the system.

The CDs are special issues available for subscription from June 12 to June 18, at rates that are more than a percentage point above the regular CD issued by BOJ.

The offers are being used as tools by the central bank as an alternative to investors with cash that would otherwise be invested in the foreign exchange market, thereby taking downward pressure off the local currency.

However, the JMD ploughed through the psychological barrier of J$100 per share last Friday, June 7. It traded at J$100.30 against the USD on Wednesday.

BOJ says it aims to raise J$3 billion from a 183-day CD priced initially at 6.77 per cent for the first quarter and thereafter at the three-month treasury plus a reset price of 0.15 per cent.

For the other CD, a one-year issue, the BOJ has set no limits on the funds to be raised from the offer. The initial coupon rate is 6.85 per cent payable in the first quarter. The reset price in the following periods will be 0.23 per cent above the three-month treasury rate.

The offers are open to BOJ’s licensed primary dealers and commercial banks.

The central bank said it would continue to offer its regular 30-day CD at the current rate of 5.75 per cent.

The BOJ has already placed seven special variable rates CDs since April -- the current issues will bring the placements to nine year to date -- as well as a fixed rate USD-indexed bond under its liquidity management programme.

business@gleanerjm.com

[Lazie]

So, since there is a claim that the J$ is overvalued and should be allowed to find it's way, why is the BOJ doing this?

[Hortical]

$125 by December 31?

[Lazie]

$125 by December 31?

While jokers will come here and insist the J$ overvalued, I hope you are wrong. At $125 things would get even harder for the people.

[Sir X]

Rebelution ...insolvent ...unsustainable...we cant even compete in caricom.

[Willi]

We cant even compete in Jamaica!

[Sir X]

Exactly,same happens in the usa ,where cheap asian goods flood the market,what does america do flood other markets ,at the same time wage war with asia-china, we cant do either but bitch.

The nut had a point.

[Assasin]

every so often America do stuff to slow the flow of Chinese goods. Don't fool yourself, most of the major firms in America have businesses and invest with China.

Our case is totally different with Trinidad. Right now Jamaica is the dumping ground for goods from any and everywhere.

[Sir X]

lol....different in that we dont dump on anyone else in caricom period , in other words wi nuh ready,like i said if wi caan deal wid caricom,who can we deal with....keep bitching as if it will change,chances are if T&T stop dumping they will still be out performing us .

[Assasin]

exactly, but we have the market so you don't lay down and play dead. Right now America is not playing dead. America have a huge oil reserves and can even help China with theirs as China can't drill currently as America do. GM, GE, Walmart, Starbucks, etc. all have big investment in China

What do we export to Trinidad? What major investment Jamaica have there?
They blocked our patty meat until they got called out. Now it is proven that the repackage things in the name of Trinidad and resell it so how do we just leave them and nobody complain?

[Sir X]

Is trinidad the only market in the carribbean or central america ,no one is saying play dead , Trinidad will be dealt with ,but that still doesnt solve our problem, we still cant compete in our market on an even playing field,point is we not competitive in other markets in the carribbean on a level playing field , btw trade is never fair ,its war....wi nuh ready

[Assasin]

"Is trinidad the only market in the carribbean or central america ,no one is saying play dead "

if there is violation it must be checked and punished. We need to find out how we can keep some a di goods out.

[Sir X]

lol...yuh caan ansa ....i agree with your point but keep it real , btw jamaica isnt the only one that has trade issues , cc the usa ,china europe,africa,latin america .

[Assasin]

"....i agree with your point but keep it real , btw jamaica isnt the only one that has trade issues , cc the usa ,china europe,africa,latin america ."

yes but you can't make that deter you. You have to take steps, you remember when the steel industry was going to die in America and it was in Bush heartland? He put tarrifs on steel from China and gave the American industry some space. Man all a import out of date box juice and tilapia from china, a what a gwaan??? Man a import banana and make chips and call it Jamaican banana chips. Man a import pipe water from America inna bottle. LOL

[Sir X]

To reinforce the point about Nicholson statement , which is an indictment against the Jamaican government- past & present , even if we wipe away all debt where is our manufactoring base , do we have a culture of exporting ? We are ingrained to beg and borrow as a government,business and people , i hear Caymanas Park a beg government loan ...KMT ! .As a manufactoring sector it is almost invisible, Grace Kennedy seems to be the exception , and Jamaica needs 10 Grace Kennedys to make in roads into our psyche/debt. I see goods package with Grace logo made in singapore.As willi says they cant compete at home , so how then caricom.Bashing T&T is an indication of the bigger problem and fixing whatever trade balance with them will not stop our markets being flooded by some secoundary country.In the 80s it was panama, higglers went to panama bought goods and flooded the economy , we had the same cry.....

TRAPPED! IMF Rep Says Without Key Policy Changes, Jamaica Will Remain In Economic Rut
Published: Thursday | June 13, 2013 12 Comments

Dr Damien King, economist . Gladstone Taylor/Photographer
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Livern Barrett, Staff Reporter

ThE International Monetary Fund's (IMF) outgoing senior resident representative in Jamaica, Dr Gene Leon, has warned that whether the country can claw its way from under the mountain of debt it now faces will depend on the policies that are put in place.

Leon, who was speaking at a Gleaner Editors' Forum at the newspaper's central Kingston offices yesterday, said "wishing away" the debt stock was not an option, as that would still not solve the problem.

"Supposing tomorrow God would give us a wish and that one wish was to get rid of the entire Jamaica debt, [so] you wake up tomorrow morning and you have zero debt," he said, as he sought to illustrate his point. "What guarantee would you have that in five years' time, in 10 years' time, the debt is not exactly back where it was? Ultimately, it is the policies that you are going to put in place," he asserted.

Head of the Department of Economics at the University of the West Indies, Dr Damien King, agreed, calling Leon's assertion "a fundamental point".

"The issue is not so much the elements of the $70-billion adjustment programme," King said in reference to the Budget deficit.

"The real issue [lies with] the mechanisms of fiscal governance that got us into this position and have kept us in this position. And if you want to understand many parts of this programme, you have to recognise that," he argued.

NO EASY WAY OUT

"So, if we are going to sit here and try to think up some easy get-out of this deep hole, … it doesn't exist," King continued.

Seeking to put the IMF deal into perspective, Leon, who demits office at the end of next month, pointed out that Jamaica is now faced with a 150 per cent debt-to-GDP ratio, as well as accumulated net indebtedness to other nations of about 125 per cent, or one and a quarter times what is produced annually.

According to him, this is compounded by 40 years of less than one per cent economic growth, caused by low productivity, lack of competitiveness, rising energy costs, and inhibiting bureaucracy.

"You are starting from that position … . Your creditors and lenders of first resort are not comfortable in wanting to extend more financing to you," Leon reasoned.

"That initial position says you have to do something about it because, going forward, you are not sustainable," he argued.

However, rather than question how realistic the programme is, Leon suggested that Jamaica examines its resolve to meet the target agreed to in the standby deal.

"Your initial conditions do not literally give you the option of thinking that you have the liberty to pick and choose," he cautioned.

"I would prefer to say, 'How much resolve do I have? How much do I need to get everyone together to allow me to get to where I need to go?'" he said.

"I would prefer to think of it as what we need to do to make it 'doable' because the alternative is not contemplatable," he concluded.