The Jamaican dollar continue to lose value against the US dollar but gained against the British pound and the Canadian dollar, on Tuesday. Authorized dealers purchased the equivalent of US$31,351,075 versus US$46,947,247 on Monday, and sold the equivalent of US$32,316,397 compared to US$40,489,087 on Monday.
In US dollar trading, dealers bought US$27,498,857 compared to US$42,320,091 on Monday. The buying rate for the US dollar put on 20 cents to $113.39 and US$29,712,322 was sold versus US$37,843,073 on Monday. The selling rate rose 7 cents to $113.89. The Canadian dollar buying rate rose 22 cents to $97.14 with dealers buying C$1,435,591 and selling C$785,344, at an average selling rate that erased 34 cents, to $99.04. The rate for buying the British Pound climbed 11 cents to $175.52, for the purchase of £1,434,718, while £547,510 was sold, the rate slipped 29 cents to $177.70. At the end of trading it took J$139.90 to purchase the Euro, 3 cents less than on Monday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$137.13, down by a cent.
Other currencies bought, amounted to the equivalent of US$401,331 while the equivalent of US$1,066,818, was sold.
Highs & Lows| The highest buying rate for the US dollar, closed 12 cents higher at $114.22, the lowest buying and the highest selling rates were unchanged at $93.52 and $119.84 respectively, but the lowest selling rate jumped $18.15 to $111.50. The highest buying rate for the Canadian dollar slipped 15 cents to end at $99.80. The lowest buying rate closed 24 cents lower, at $79.39. The highest selling rate fell 32 cents to $102.72 and the lowest selling rate dipped 35 cents to $95.65. The highest buying rate for the British Pound, gained 80 cents to $179. The lowest buying rate eased 25 cents to $143.34, the highest selling rate fell 43 cents to $184.79 and the lowest selling rate lost 30 cents to $172.70.
J$ gains vs Canadian & Pound – Tuesday
Business sector don’t get it
Jamaica has to rely on the private sector, to help lift it from the economic quagmire it finds itself in, for the past 3 decades. A look at certain data shed some light on the task the country faces.
It tells of a nation where the business sector leaders seem to be managing more from the seat of their pants than based on properly informed position. Take the case of inflation, which ran at 5.1 percent up to August, for 2014, for an average of just less than 0.68 percent per month, and against the back ground of slippage in the exchange rate in the early months that would have helped spike inflation then. With an almost stable Jamaican dollar in September a survey done by the Statistical Institute of Jamaica on behalf of the Bank of Jamaica to ascertain the expectations of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices in September this year, to which 270 responded, found that their expectation for inflation for 2014, will end at 10.2 percent. On what basis is they arrive at this forecasted amount.
Interestingly, the official inflation rate to October is 7.3 percent, the full year’s figure should hoover around this level with the price of oil on the world market having declined sharply, pulling some local cost down with it.
The business sector record on business confidence both on the current state as well as a year out has no better record as ca be seen from the wild fluctuation in the periodic results.
On the matter of Treasury bill rate, while rates have been declining monthly from a peak in March, this year. The survey respondents expected the rate for the 182 day Treasury bill to come out at 8.6 percent at a time the rate had already declined to 8 percent. Admittedly, the interest rate forecast is not totally inconsistent with the managerial group inflation forecast, as investors would want to be compensated with an interest rates above the inflation as they see it. But if the inflation rate forecasted is as high as the private sector figures there would also be need for a greater slippage in the rate of exchange for the Jamaican dollar versus the US dollar. Yet their perception that the exchange rate would slip by 1.3 percent by the end of 2014 from September, would not be in keeping with the high inflation rate they projected.
Record take – Jamaica’s remittances
Jamaica enjoyed record inflows of remittances, between January and July this year. The critically important flow of funds, reached $1.238 billion, representing an increase of US$47.6 million or 4 percent to be the highest inflows ever, according to the latest data on remittances, released by the country’s central bank.
The 2014 inflows, bettered the previous high of US$1.195 billion, in 2012 and the next highest, $1.192 billion in 2008. Net remittances for 2014 to-date, is US$1.109 billion, a growth of US$61 million or 5.8 percent relative to 2013. The out-turn for the period reflects an increase in gross inflows and a reduction in outflows.
Net remittances for July this year were US$160.5 million, an increase of US$10.9 million or 7.3 percent over the July 2013. The growth in net remittance inflows reflect an increase in gross remittance, which was partially offset by an expansion in remittance outflows.
Gross remittance inflows for the month were US$183.2 million, an increase of US$12.6 million or 7.4 percent compared to July 2013.
Jamaica’s remittances upward climb
Jamaica net remittances for May this year, grew US$10 million or 6 percent, to US$172 million, versus May 2013. The increase resulted from gross inflows growing by US$7 million to US$189 million, and a contraction in outflows.
Remittance Companies accounted for an increases of US$13 million in inflows, while Other Remittances saw a reduction of US$5.5 million, Bank of Jamaica stated in their report on remittances.
Net remittances for the year to May, amounts to US$795 million, representing growth of US$42 million or 5.6 percent, compared to 2013 period. The outturn for the review period, reflected an increase in gross inflows, and a reduction in outflows. For the period total remittance inflows were US$887 million, representing an increase of US$33 million or 3.8 percent.
Big improvement in balance of payments
There is a major improvement in Jamaica’s Current Account deficit for the March 2014 quarter, according to a report out of Bank of Jamaica. Lower imports partially offset by lower exports and improved service inflows led to an improvement of US$301 million the deficit of US$401 million in the March 2013 quarter, resulting in a deficit of US$101 million.
“The outturn for the 2014 first quarter is the second lowest current account deficit recorded since 2007” the country’s central bank states. The improvement in the Goods Account was due to a significant decline in imports which was partially offset by decline in exports. The decline in Imports of US$281 million was primarily driven by a US$172 million and a US$133 million decline in chemicals and mineral fuels imports, respectively. The decrease in exports was primarily attributable to a US$86 million and a US$31 million decrease in chemical and crude material exports, respectively, partially offset by an increase in the exports of manufactured goods of US$21 million.
An increase of US$31 million to US$270 million in the balance on the Services sub-account resulted primarily from improvements in transportation and travel services of US$33 million and US$18 million, respectively. The improvement in transportation resulted from reduced freight costs associated with the reduced imports, while the increases in travel receipts occurred due to a 3.3 in visitor arrivals.
Businesses more optimistic
Perception of in the most recent survey done in May of this year showed improvement in present business conditions by the business sector, compared to the previous survey done in April. The Bank of Jamaica commissioned survey, shows the index moving from 95.8 in April to 102.5 in May. The results are well off the 158 achieved in December 2011 or 135 reached in March 2013.
Expectations about future business conditions, however, were largely unchanged. Of note, both indices remained below the levels recorded in Fiscal year 2011/12, nonetheless, the perceptions of present and future business conditions have displayed a general upward trend since the April 2013 survey.
