(Trinidad Guardian) Local businesses seeking to get US dollars from the Jamaican banking system using the T&T dollar may no longer be able to do so. So said economist Dr Vaalmikki Arjoon as he responded to the decision by the Bank of Jamaica (BoJ) to temporarily suspend the acceptance of TT currency from tomorrow.
“It will put a serious dent for those T&T economic agents who try to access US dollars from the Jamaican banking system using the TT dollar, similar to what has occurred in Guyana.
“Indeed, several business entities have made attempts to supplement the shortfall they face when accessing USD from local banks by attempting to source them, not only through the black market, but also from other banks in the region including in Jamaica.
“This move by the BoJ will, however, stymie such a practice in Jamaica, but can thereafter help to compound black market sales of US dollar,” Arjoon explained. He also noted the move showed waning confidence in the TT dollar in Jamaica.
On Friday, Jamaica’s central bank, which is called the Bank of Jamaica, said it was suspending the exchange of T&T banknotes at its counter effective tomorrow “until further advised”.
In an interim notice, the BOJ advised the public “that the existing arrangement for BOJ to repatriate T&T banknotes is currently under review”.
In this regard, effective tomorrow, the exchange of TT dollars at BOJ’s banking counter is suspended, the BoJ added.
Arjoon also noted that some in Jamaica who send monies to, for instance, families in T&T may also opt to send it in US dollars especially given the inaccessibility of US currency locally. He also noted that demand for a country’s currency is also a reflection of the confidence in the currency’s economy.
“If there is insignificant demand for the TT dollar by Jamaica, it suggests waning confidence by certain Jamaican economic agents in the T&T economy.
“This could be reflected in, for instance, a lower incidence of Jamaican visitors to T&T. Those who do visit, whether it be for business or entertainment etc, may opt to use their credit cards or access cash directly here through the ATMs when spending,” Arjoon noted.
“It’s possible that the reason for the suspension of TT dollar purchases by the Bank of Jamaica was that sales of TT dollars by the commercial banks in Jamaica are not significant and possibly very marginal, owing to low demand for the TT dollars,” he explained.
Arjoon further said that the cost of buying and holding the TT dollar for the Bank of Jamaica and commercial banks in Jamaica would be much greater than any returns made from selling the TT dollar.
The economist noted the demand for TT dollars in Jamaica might not be healthy, stemming from the fact that economic entities in Jamaica have limited need for the currency.
While noting that trade between the two countries is conducted in US dollars, Arjoon said even if the BoJ stopped buying TT dollars, it would likely not affect exports from this country to Jamaica because these transactions would typically be carried out in US currency.
