BOJ Reserves and Devaluation

I'm starting to realize that It's not so much that GOJ is trying to devalue the dollar. It's more that they don't care enough to spend reserves to defend it. They don't care because devaluation will get them what they need. Inflation eats into the banks JMD loan profit, and loosens monetary policy, which is like the lowering of interest rates that everybody has been crying for.
The banks are making massive currency trading profits. A lot of Jamaicans save in USD. When they sell or transfer a little from their US acct to their JMD account they don't look at the price they get. The dollar is $137, the banks are transferring at $132. That's a HUGE spread! Especially when you think of the total trading volume across all those transactions.
For so long, both the GOJ and opposition were crying for lower bank profits off the backs of Jamaicans. The Clarke administration might get the credit for being the one to actually do something about it.
-RG

In response to:
Wednesday, August 22, 2018

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