Jamaica dollar devaluation not over yet, IMF boss asserts

(Jamaica Gleaner) KINGSTON, Jamaica: The Head of the International Monetary Fund (IMF), Christine Lagarde has given the clearest indication that there will be a further devaluation of the local currency.

Christine Lagarde
Christine Lagarde

“There is still a little way to go, not much,” said Lagarde at a luncheon in New Kingston yesterday.

But she warned that keeping inflation under control is critical to reducing net devaluation.

“Governor, when you are at the mercy of having to get rid of your reserves in order to defend currency, I am sure it must have occurred to you that Jamaica was bleeding and that it was not good for the country to actually spend so much of its reserves to defend a currency which was clearly not valued at the right level,” she said.

Her reference to governor was to Brian Wynter, head of the central bank.

The Jamaican dollar has fallen from J$99.33 to US$1 on May 1, 2013, when the IMF agreement was inked, to J$112.03 to US$1 at the end of trading on Thursday.

Lagarde who is in Jamaica on a two-day visit says the slide had to happen because local currency was overvalued.

But Lagarde said domestic production is beginning to replace imports for some agricultural goods, production is going up and foreign direct investment is increasing.

“The competitiveness of Jamaica is on its way back,” Lagarde asserted.

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