Devaluation has come to an end – King
SENIOR LECTURER in the Department of Economics Dr Damien King has declared that the end of devaluation has come.
Speaking at a policy discussion forum, The End of Devaluations? The Implications for Businesses and the Economy of Jamaica’s New Exchange Rate Landscape, organised by the Department of Economics at the University of the West Indies, Mona Campus, King said an under-control inflation rate has been the power behind the strengthening of the dollar.
“There is now a set target for the inflation rate, and the Bank of Jamaica (BOJ) has the responsibility to maintain it ... if they don’t, then they are held accountable and there will be consequences,” King stated as he defended his assertion.
He said in the past, the BOJ had failed to fulfil its duty to maintain the value of the currency.
King said for decades, Jamaica’s inflation figure has been running ahead of that of the United States, which caused the Jamaican dollar to lose value against the greenback.
The economics lecturer made it clear that his decree that the days of devaluation are over did not mean that the dollar would not devalue from time to time as the exchange rate fluctuates.
King said it was good for the exchange rate to be on a roller coaster as there was a certainty that “the dollar will end up right where it started at some point”.
Meanwhile, deputy governor of the Research and Economic Programming Division and Financial Stability at the BoJ, Dr Wayne Robinson, said the central bank’s strategic policies have been working.
He said measures such as B-FXITT and its policy of declaring a midday exchange rate has helped to strengthen confidence in the market and in turn ease speculation which sometimes is directly responsible for a spike i n the US dollar against the local currency.