I had to attend a meeting a few days ago which concerned the sliding exchange rate, and how to contain it. The meeting was at 9.00 am at the office of a well-known group, and I arrived on time, had to wait a few minutes, then ushered into the meeting. I was surprised to see that a discussion had started, indeed probably just ended, so I asked the Chair to confirm a 9.00 meeting start, which he did. At that point I overheard 99.75 from one of the members in a discussion with another that seemed to be a rate, so I was surprised that a decision was already made.
I was reminded of the soundtrack from the rock opera Jesus Christ Superstar, when Jesus comes before Pontius Pilate, and Pilate says: “You must be careful, for I have your life in my hands.” Jesus replies: “You have nothing in your hands, all the power you have, comes to you from far beyond: Everything is fixed, you can’t change it.” Pilate replies: “You are a fool, Jesus Christ, how can I help you?” The crowd prompts: “Pilate, crucify him, crucify him.”
The discussion centered on the absence of representatives from Bank of Jamaica, and surprise was indicated by the members. (Later I found out from BOJ the invitation was questionable.) I heard the Chair’s call to adjourn twenty minutes later, and confused, I asked what decision was made? I was told we were going to operate within a band where selling takes place between 99.75 and 100.00. This rate was already in active application among the Cambio Association members; it was that the Banks wanted to change their rates, and they did so without reference to anyone else save the Cambios, who they didn’t need any way!
It seems that with the IMF funds coming in, the bankers all decided to sell their holdings. One banker’s stock was US$9.0 million which he sold at 99.44, which he disposed the previous day.
In my mind was the query: But US Dollars supply has indeed been scarce in the market, so where could that Banker get so much money so quickly? The answer came within seconds; he was hoarding it all along, but he claimed it belonged to a customer. Who knows?
What had been happening, the Banks were purchasing US Funds from the Market, and hoarding it. The rate was manipulated to its highest point, and then sold at a substantial profit. I guess with the rates going down they intend to buy and hold once more, creating a shortage, then selling the funds in another profitable move. Good business no doubt, but is it fair to other users, traders, and the public? Not at all!!
Everyone it seems is trying to maintain a certain rate, and on comes the friendly Bank, shafting us! I cannot have any sympathy for them, and I am surprised financial authorities allowed this to happen in view of the many banking regulations we have in Jamaica, especially when the needs of all persons, rich and poor, are dependent on a stable currency.