KINGSTON, June 18, 2018 - With the Jamaican dollar now trading at J$132.20 down from J$132.53 as per the Bank of Jamaica's daily foreign exchange trading summary, the Private Sector Organisation of Jamaica (PSOJ) has declared that Jamaica's poorest will be the ones hit hardest by the latest slide in the Jamaican dollar.
PSOJ President Howard Mitchell says despite assertions from the Government and the Bank of Jamaica that such fluctuations are expected and the foreign exchange rate will normalise soon, it goes without question that, once the costs of inputs go up, prices to consumers will also rise.
"...Therefore, (these fluctuations) need to be avoided because we are a low wage economy and the people at the bottom of the economic pile must be feeling pain when these changes take place," he insisted.
Mitchell pointed to Jamaica's low productivity as a major factor behind continued fluctuations in the value of the Jamaican dollar against the US currency, noting that "Until we remove the impediments to production and until we increase the inputs that are local in our exports, we will not earn the kind of foreign exchange that will stop these fluctuations from taking place; and yes, I understand that we are more competitive in our exports when the US dollar moves against the Jamaican dollar, but quite frankly, if you are not exporting, that doesn't benefit anybody," he suggested.
Mr. Mitchell said the only industry benefitting from the slide in the dollar is tourism. But, at the same time, he noted that there are concerns about the percentage of tourism earnings which remain in Jamaica.
In the meantime, the Small Business Association of Jamaica (SBAJ) says the slide in the value of the Jamaican dollar against the U.S. currency, could result in significant fallout for that sector. Already there are fears that some small businesses will be forced to close their doors.
President of the SBAJ, Hugh Johnson, said the movement in the exchange rate is of particular concern because some members are operating on a thin margin.
He recalled that during the first half of 2017 when the Jamaican dollar was going through another period of devaluation some small businesses were very close to collapsing, “but because over the last eight months, the dollar was somewhat stabilised.”
Now, with this new round of devaluations, he said that fear has returned.
“We would admonish the Central Bank Governor to ensure that its programme is so designed not to cause these rapid and drastic movements; either way it goes, it affects your operations significantly because of how fragile… or operations are in terms of margins,” he said.
Mr Johnson noted that that small businesses will have to increase the prices of their goods and services to remain viable and added that not many small businesses export so they will not benefit from the depreciation of the Jamaican dollar.
He said used car dealers have been particularly hard hit by the currency slide, “because they would have signed off a particular price point with a customer, and the sudden movement has eroded all of that.”