The Jamaica dollar breaks a new exchange rate threshold, now being valued at $120 to $US1.
This marks a major fall from the $99.33 to US$1 valuation on May 1, 2013, following Jamaica’s new IMF loan agreement. IMF chief Christine Lagarde had then said Jamaican currency was overvalued.
However, last month, Bank of Jamaica Governor, Brian Wynter declared that the Jamaican dollar is no longer overvalued and therefore less susceptible to unpredictable depreciation.
The Opposition Jamaica Labour Party and some manufacturers have campaigned against devaluation, saying it will result in increased cost of imports which would limit economic growth.
In a report in September, the IMF argued that analysis of quarterly exchange rate data for Jamaica from 1996 to 2014, showed that “real depreciation (against the US dollar) of 10 per cent is associated with around 0.5 percentage point increase in economic growth.”