Jamaica Gleaner
Published: Sunday | February 1, 2009
Home : Letters
Fix the dollar or let it loose
The Editor, Sir:

"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein

We must ask ourselves if the team at the Bank of Jamaica and the Ministry of Finance are among the insane as it relates to the measures they have undertaken in 'protection of the dollar'.

This knee-jerk nonsensical habit of hiking interest rate to protect the Jamaican dollar has proven to have failed miserably over the years and yet no lessons appeared to have been learnt by the central bank, the ministry of finance and, by extension, the current government.

stifle businesses

The recent rise in interest rates will merely stifle businesses that are already struggling and put excessive hardship on individuals who will see interest rate on their consumer and mortgage loans rising.

In an economy where central banks the world over are making drastic cuts in rates to stimulate their economy, Jamaica has dared to be different by marching steadfastly in the wrong direction. What are we trying to prove to the rest of the world?

We must do something radically different and it is time that the BOJ/government move to fix the dollar at an appropriately competitive rate. If there is sufficient US dollars in the market it would therefore be possible for persons to obtain their requirements at a set rate without having to bid at higher rates for the currency.

stop the intervention

If the BOJ is unwilling to do this and if, as they claim, there is no shortage of US dollars, they should stop the intervention in the market and let the dollar find its own way, as opposed to bleeding the Net International Reserves.

Those who follow the stock market have seen how the value of stocks of sound, solid, profitable and efficiently managed companies on the local stock market plummeted. There is no panic on the part of the management of these companies to get the prices of their stocks to rise to their previously higher levels. They simply continue to manage prudently and you can bet your bottom dollar that the value of these stocks will eventually rise. Are there any lessons in this approach for the BOJ and the ministry of finance?

For those who say radical new measures as proposed above will not work, the question these persons should answer is: where would high interest rate seekers put their monies when there are no higher rates available anywhere?

If these individuals/organisations need to satisfy their unquenchable thirst for higher returns they will have to invest in new business ventures, real estate or the stock market.

It is obvious that we cannot continue to implement measures that don't work. The measures of the BOJ in the protection of the Jamaican dollar has never worked and will never work.

I am, etc.,



Kingston 20

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