JMD USD Devaluation

There seems to have been a glut of food (overproduction) recently which kept inflation low. So the gov't can "steal" a little devaluation and economic activity without the inflation cost (for a while at least).
Why would they spend reserves to defend the dollar if they are getting what they want with devaluation? Cheaper exports, cheaper local assets lower cost of local debt (basically lower interest rates).
All this should mean higher export and FDI activity, higher credit and business activity. Non dollarized (USD) savers see low inflation, and the rest are dollarized or have inflation-protected savings.
Maybe in the future they won't bother to defend the dollar when prices are low.
-RG

In response to:
Thursday, August 23, 2018

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