KINGSTON, Jamaica – The International Monetary Fund (IMF) is promoting the formation of a trading platform that can help assist foreign exchange dealings for traders and hedging development as concerns about Jamaica dollar’s depreciation lingers.
According to Uma Ramakrishnan, the outgoing mission chief of IMF to Jamaica, they have long been discussing the need to provide a pricing transparency to traders. She also said that the central bank is already in the works of building a platform which is set to launch early next year.
The Bank of Jamaica (BOJ) also made a statement on Tuesday stating that they have already advanced in developing a trading platform which was specifically designed to facilitate foreign exchange transactions with greater transparency. On the same day, the BOJ also put about $40 million into the market. BOJ also said in the statement that they will continue to motivate people in Jamaica to utilize forward contracts when it comes to managing their needs for foreign exchange.
Ramahrishnan also said that more knowledge is needed to answer why the exchange rate is moving as well as in listing the benefits of having a flexible exchange rate. It was a response after the IMF Mission Chief was asked about the fast diminution of the Jamaica dollar against the US dollar.
The IMF Mission Chief to Jamaica also noted a few more factors that accompanies the depreciation of the foreign exchange cycle. She said that there isn’t any conversation or communication when the currency appreciates, one thing that a flexible exchange rate can do.
Further, Ramakrishnan added that the conversation shouldn’t just lie on one side. The conversation should be present in both direction as she noted that for the last 12 to 18 months, the exchange rate has not depreciated a lot. She also said that such swings happen because of the more dynamic economy Jamaica is going for. There are capital flows that are going out as capital comes in the country, and according to her, that is a significant sign that a country is growing.
Ramakrishnan further stated that the driving force behind the disorderliness has to be understood. Until then, central bank wouldn’t intervene in the market.
From the statement of BOJ, they also said that their commitment relies on maintaining the orderly conditions in the market. They said that they will only intervene to prevent any disorderly events within the foreign exchange market conditions.
Referring to the forthcoming trading platform, Ramakrishnan commented that they are hoping it can provide enough transparency.