My Two Cents » How do we reduce our dependence on foreign currencies? : A Jamaica Gleaner Blog

How do we reduce our dependence on foreign currencies?

85…86…87…88 and rising, the question on everyone’s list is “how high will the exchange rate rise?”

The dreaded 100 to one rate which once seemed so far away is now just around the corner.

Initially, the government has said that the need of financial sector companies to meet margin calls resulted in unusually high demand for foreign currency.

Now we are told that suppliers can not get access to their regular lines of credit resulting in them having to go to the banking system in order to meet their needs.

The Minister has conceded that there is speculation in the market place but seems to be playing down its’ effect on the value of the Jamaican Dollar.

I suggest that the problem may be one of confidence or lack thereof.

Many Jamaicans do not have confidence in the ability of the financial sector to weather the current world crisis or in the government to manage the crisis.

What is needed is strong leadership from the top, simply denying the problem will not make it go away.

The Jamaican people want to know that the country is doing all that it can to minimise the effects of the worldwide recession.

At times the statements coming from our leaders give a mixed picture of the situation. One minister will sound very optimistic and the other extremely pessimistic.

Good leadership should result in one message coming forth; all players must be on the same page and working towards the same goals. Without this leadership there can be no confidence instilled in the hearts of the people.

The efforts of the government in securing external financing and thus bringing in much needed foreign exchange are commendable but “is it enough?”

The people must be pointed in the right direction. It would be foolhardy to think that we can escape the effects of what is happening; we must be prepared to sacrifice some things for the good of the country as a whole.

Now is the time not to go out and buy $US but instead to cut back on imported items reducing the need for foreign exchange.

Let each man search his heart and find the strength to just ‘say no’ to self but yes to this country ‘Jamaica land we love’.

What do you suggest we do to reduce our dependence on foreign currencies? Leave me a comment.
Carl.

Tags: economy, Finance, foriegn currency, government, jamaica

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3 Responses to “How do we reduce our dependence on foreign currencies?”

Steve says:

March 14, 2009 at 3:47 pm

hmmmmmmmmmm Simple but not easy.

Increase tariff on imports which is very simple but not an easy thing to accomplish.

First Jamaica will be taken to the WTO and trashed for not abiding by international trade laws. So that is a non starter.

Second, the Jamaican consumer can start by purchasing only the necessary things that cannot be sourced locally.

Three, start to produce more things locally, but then again a lot of what we will produce will need raw materials that we have to import.

A I said before it will not be easy. What Jamaica can do though, is start producing more goods for the export market and take advantage of their weak currency that will make the price of their products more competitive and attractive to foreign consumers.

What will happen is that as Jamaica starts to export more then foreigners will send more of their currency to Jamaica which will cause the Jamaican dollar to appreciate over time. The foreign currency will have to depreciate to create parity and this cycle will continue until a fairly decent rate of exchange will be established.

That is why when the Government of Jamaica was using devaluation as a monetary policy I was confounded because in a free market economy, trade between nations is the best way to create currency valuation or devaluation.

So the best way to reduce dependence on foreign currency is to have a robust export policy and make products that foreigners want.
Jay says:

April 19, 2009 at 4:41 pm

Devaluation and the Jamaican economy.

I hear it being said on a consistent basis by many a writers and public speakers that the Jamaica dollars is overvalued.

Full article
http://johnpattex.blogspot.

(The above article was written back in 2007, and since then the dollar has moved to almost $90.0 – $1.00 in 2009)
Bob says:

May 25, 2009 at 11:31 am

THE JAMAICA DOLLAR IS A FIGMENT OF ANY ONE IMAGINATION IF THEY THINK IT VALUE ANY THING . IT DOES NOT VALUE A SINGLE PENNY AGAINST THE US DOLLAR!… WHAT WE HAVE TO DO IS TO PRODUCE AND MARKET SELL MORE JAMAICANS GOODS AND SERVICE ABROAD TO BE ABLE TO GET THE CURRENCY STABILIZE!.