PattersonPRIME MINISTER P.J. Patterson last night announced a three-pronged attack to halt the precipitous slide of the Jamaican dollar in foreign exchange trading during the past week.
The Bank of Jamaica (BoJ) will continue an aggressive intervention in the foreign exchange market, the Ministry of Finance will issue an indexed bond and members of the private sector are being asked to act as "patriotic corporate citizens" and sell normal amounts of foreign exchange into the market.
As of this morning, the Bank of Jamaica (BoJ) will be intervening in an effort to stabilise the foreign exchange market "and bring order to trading". This action will continue for as long as is necessary, Mr. Patterson said in a television broadcast.
Mr. Patterson said that some speculators will get hurt in this process.
"They will find that they cannot regain the Jamaican dollars which they spent to purchase foreign exchange at an artificially high rate," he said.
Speculators had been blamed for the steep decline that led to the dollar depreciating by $6.49 or 10.5 per cent, during the past week. At the close of trading on Friday, the dollar had fallen to an average selling rate of $67.22.
"Let me remind all Jamaicans, we have fought too long to bring order to the foreign exchange system, to control inflation and to build up our reserves to allow anyone or any group to erode and destroy our hard earned gains. For those speculators, the battle lines are drawn," the Prime Minister emphasised.
The second measure in the three-pronged attack will be the issuing of an indexed bond. According to Mr. Patterson, this move is a clear demonstration of the Government's confidence in the Jamaican currency and the actions being taken. The Prime Minister said, however, that details of the bond will be revealed by Ministry of Finance and Planning, Dr. Omar Davies, later in the week, although he said that the market has already been alerted to the imminent issue of the bond.
In asking for support for the third measure in the attack, the Prime Minister appealed to private sector entities, earning "significant levels of foreign exchange", to make no change to their regular activities in the market.
"Whilst the BoJ and the Government have the principal responsibility for restoring stability to the system, your full support is needed to complement our efforts to restore order as quickly as possible," he said, as he asked the private entities to continue selling their foreign exchange in regular amounts.
Earlier in his address, Mr. Patterson responded to a number of speculations he said he felt contributed to the financial crisis now facing the nation.
Mr. Patterson announced that at a meeting at Jamaica House on Friday, Finance Minister, Dr. Omar Davies had reached an agreement with private sector leaders on a compromise solution to the controversial four per cent cess on imports.
The solution, he said, will yield the same level of revenue as originally projected and has been found to be more acceptable to the business interests. The Finance Minister will spell out the new terms in Parliament on Tuesday.
In "scotching" the rumours, he stated that the Government has no intention of re-introducing exchange controls, no plans to enter into a borrowing programme with the International Monetary Fund (IMF), and that there was no agreement between the Government and the IMF or any other institution to depreciate the rate of the Jamaican dollar.
