Finance Minister Releases Exchange Rate Correspondence

Finance Minister, Dr. Nigel Clarke, today released 25 pages of correspondence between himself and Bank of Jamaica Governor, Brian Wynter, to prove there’s been no manipulation of the exchange rate.

The documents include three letters between the two, as well as, a report on the missed inflation target.

There’s been concern that the government has been manipulating the value of the Jamaican dollar in order to reach its inflation target.

The dollar has been sliding for 15-consecutive weeks, opening today at an average selling price of $137.47.

Dr. Clarke released the documents at his Ministry of Finance office this morning.

In the first letter, dated August 7, 2018, Governor Wynter informs the Finance Minister that inflation fell below the BOJ’s 12-month target of 5-percent, and that they were obligated to provide an explanation to the IMF.

The letter is followed by a second correspondence from the BOJ Governor dated yesterday, August 21.

Attached, is a 16-page report and an appendix about the reasons for the breach, and the steps they’re taking to correct it.

None of those measures in the documents released to the media, indicate any manipulation of the exchange rate.

Speaking after the release this morning, Governor Wynter flatly denied doing so.

According to the documents released to the media, the primary means by which the Central Bank hopes to boost inflation, is by lowering its policy rate.

They’ve done so eight times over the past year and a half, reducing it to an all-time low of 2-percent this past June.

Governor Wynter explains how this is expected to impact inflation.

But it takes a while to work – usually about one to two years, so inflation is expected to remain below target until about June of next year when the actions they’re taking now begin to have an effect.

The Governor says they’re also considering whether to reduce policy rates even further.

However, a letter from the Finance Minister dated yesterday cautions against any action that could result in inflation rising too high.

This is the first time in history such documents have been made public.

Dr. Clarke says he released them because transparency is important.

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