Williams explains dollar slide, points to trade and private debt restructuring

Responding to calls for the government to explain the sudden and rapid decline in the Jamaican dollar against the United States dollar, Minister Without Portfolio in the Ministry of Finance and Public Service Fayval Williams said there is a higher demand for the greenback which has put pressure on the local currency.

It's now costing J$133 for US$1.

According to Williams, the demand is being driven by companies which are restructuring their US dollar debts as well as by an increase in foreign imports.

“We are seeing companies taking a look at their debt structure as interest rates in the local market have come down. They are looking at their debt structure because a lot of companies have US dollar debt on their books.

“As rates converge in the local market, it is an advantage for them to change out those US dollar loans into Jamaican dollar loans which is excellent, which is very good,” said Williams who was speaking at a post Cabinet press briefing at the Office of the Prime Minister in St Andrew this morning.

She explained that companies may opt for such a move as it reduces their risk to foreign exchange exposure.

“But in executing these transactions, what actually happens is that the companies actually have to go into the market to buy the US dollars to repay the loan and that causes increase demands.”

Williams said she expects that the adjustments in the foreign currency market will eventually settle down.

Williams also pointed to developments in the international merchandise trade as a factor which has caused more pressure on the Jamaican dollar.

“We are importing more than we did last year. The economy is growing; we need to import more in terms of input for the production process. When we look at the data, we see that mineral fuel and transport equipment, chemicals, manufactured goods and food are leading the increase in imports,” the minister explained.     

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