On September 30, 2013, “good news” broke that the International Monetary Fund Executive Board had approved the first review of Jamaica’s four year Extended Fund Facility agreement. The same day ‘bad news’ was announced, the Jamaican Dollar traded for an average selling rate of J$103.60 to US$1. The highest it has ever traded for in its lifetime.
This represents a 4% depreciation in the average selling rate since the approval of the IMF Agreement on May 1, 2013, when the JMD dollar was trading for an average J$99.33 to US$1.
In a previous blog on the exchange rate, diG pointed out that the staff of the IMF believed the Jamaican currency to be overvalued.
With the approval from the Board, Jamaica anticipates the receipt of the second tranche of an estimated 19.97M Special Drawing Rights (SDR) or its equivalent approx. US$30M.
Additionally, the Executive’s approval clear the way for Jamaica to receive funding from Multilateral agencies. In his address to Parliament yesterday, Minister of Finance Peter Phillips said Jamaica expects to receive a cumulative inflow of US$330M from the Inter-American Development Bank and World Bank before the end of this fiscal year.
Here is a look at monthly depreciation of the currency for the calendar year 2013:
Jan/Feb -3.1%
Feb/Mar -1.8%
Mar/Apr -0.5%
Apr/May -0.1%
May/Jun -1.9%
Jun/Jul -0.5%
Jul/Aug -0.2%
Aug/Sept -1.5%
A boost in confidence is expected as a result of the approval from the Board and the pledge from International Partners to provide funds, but is it enough to cause the ‘sliding’ JMD dollar to slow its roll, lets see… Where will the dollar be at the end of October?
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