US$1 = J$100! - J$ plunges to lowest value ever

The Sliding Jamaican dollar - record $100.08 to 1USD

THE Jamaican dollar plunged to its lowest value ever yesterday, trading at an average $100.08 to its US counterpart, a development that is in keeping with a recommendation of the International Monetary Fund (IMF).

Last month, the IMF, in its Country Report on Jamaica, said that despite a recent depreciation in the value of the Jamaican dollar, the currency was overvalued and further depreciation was needed.

"The recent nominal exchange rate depreciation has been useful, by reversing part of the overvaluation of the real exchange rate that has emerged in recent years, thus supporting price competitiveness," the IMF said.

"Looking forward, and given the need to address the remaining overvaluation, structural reforms are expected to help in restoring external competitiveness, alongside exchange rate flexibility," the fund added.

Early last month Jamaica signed off on a funding arrangement with the IMF that will see the island receiving near US$2 billion in loans over the next four years from the IMF, the World Bank and the Inter-American Development Bank under an Extended Fund Facility.

In its country report, the IMF said that there may still be a need, at times, for interventions in the foreign exchange market aimed at avoiding disorderly short-run movements. "In this context, the programme contains clear reserve targets to safeguard the adequacy of reserve coverage — a key policy priority under the programme," the Fund said.

Since the end of April this year, the Jamaica dollar had been experiencing slight fluctuations in value in the region of J$99 to US$1. It traded at an average J$99.93 to US$1 on Thursday before losing 15 cents yesterday to cross the symbolic $100 threshold.

Yesterday, the Canadian dollar gained 81 cents to trade at J$97.90, while the British pound traded at J$155.44, up 56 cents.

Jamaica's decision to decimalise its currency took effect on September 8, 1969 and saw new coins and banknotes replacing the pound, which was circulated for decades as a mixture of British currency and local issues and was always equal to the British pound.

At the time of its introduction, the Jamaican dollar was stronger than the US dollar, valued at J$0.77 to US$1.