What’s Wrong With The Jamaican Dollar?
SOME will say dealing in currency is a beauty contest. In this contest gold has been judged as the overwhelming winner. Look at India buying 200 tonnes for $6.7 bil. This can be interpreted as a lost of faith in the US dollar as the uni-polar reserve currency. Even though these may be headline grabbing, the Jamaican economy is still tethered to the American economy and as a result the currencies have a symbiotic relationship. So what ever happen to the US dollar will equally affect the Jamaican dollar.
It is time we take a look at what should be done about the Jamaican dollar. We cannot continue in this protracted decline. This vicious cycle of destructive devaluation needs to be abated. In this era of globalisation there will inevitable be less currency. We will be seeing more currency unions. Eventually all countries in the European Union will be using the euro. The Middle East and Latin America will be following soon with their own currency union. The question need to be asked does Jamaica needs its own currency? If we insist on maintaining our own currency then we need to do a revaluation sooner rather than later. How about a reverse split? Let’s take one zero off the exchange rate. So rather than the Jamaican dollar at 90 to the US dollar it become 9 instead.
Let’s take a look at the performance of the Jamaican dollars over the years. It is obvious it has underperformed. How much longer are we willing to continue on this path?
Del Warmington is a managing partner with Delwar Capital Management LLC. You can email him at delwarm2001@yahoo.com