Sliding dollar hurting, say Montego Bay business leaders

WESTERN BUREAU:

Montego Bay business ­leaders whose sales are largely generated in Jamaican dollars say the con­tinuous devaluation of the local currency against the US dollar is severely affecting their bottom line.

Their claim comes against the fact that the Jamaican dollar traded at J$140.42 to US$1 on November 1, the highest it has traded for so far this year.

With many business leaders in the western city fuming over the devaluation, which sees them buying goods at a higher price in US currency and selling at a lower rate, businesswoman Janet Silvera, president of the Montego Bay Chamber of Commerce and Industry, said that the businesses that earn in local currency are at a disadvantage as a result of the devaluation.

“Earners of Jamaican dollars are being severely squeezed with a volatile and devaluing Jamaican dollar, especially when you have to buy in the US for stock, as well as continually having to worry about maintaining margins and price to guarantee profit and be able to purchase US (dollars) for restocking,” Silvera told The Gleaner.

Silvera further noted that the reverse was true for businesses that earn in US dollars as, for the most part, their bottom line is hedged against the devaluing Jamaica dollar. She said that despite operating in a free-floating market, the chamber wants the Bank of Jamaica (BOJ) to intervene with a view of assisting those businesses that are trading heavily with the Jamaica dollar to remain operational.

“A more moderate exchange rate system is best for all our businesses’ predictability and will only be balanced by the BOJ’s decision to intervene with the use of the reserve and/or the use of other macro-monetary measures,” added Silvera.

Davon Crump, president and chief executive officer of business process outsourcing outfit Global Outsourcing Solutions, told The Gleaner that the new high of the Jamaican exchange rate will mean greater levels of instability in the market.

“Unfortunately, and most importantly, when the rates decrease, we don’t see this being reflected, and the cost of imported goods is rising, and further increases are expected,” Crump said.

The businessman noted further that the weakening of the Jamaican dollar posed a challenge that would prevent proper planning as importers would have a difficulty in proper forecasting.

“The cost of manufacturing inputs will rise and lead to even more increases in the cost of goods and services,” predicted Crump. “This now has a huge impact on consumers and micro businesses that are already struggling. They will continue to struggle as these price increases will further put a strain on consumers and limit their ability to spend.”