Friday 15 November, 2019

Banks can help productive sector better understand FX market

Curtis Martin (right), managing director of JN Bank, is greeted by Kenarthur Mitchell, commercial and financial manager at Edge Chem, following a recent breakfast meeting at the Jamaica Manufacturers and Exporters Association (JMEA) headquarters in downtown, Kingston.

Curtis Martin (right), managing director of JN Bank, is greeted by Kenarthur Mitchell, commercial and financial manager at Edge Chem, following a recent breakfast meeting at the Jamaica Manufacturers and Exporters Association (JMEA) headquarters in downtown, Kingston.

Curtis Martin, managing director of JN Bank, says banking institutions have the ability to assist the productive sector to better understand the foreign exchange market and how the impending changes will affect their businesses going forward.

Martin was speaking recently to manufacturers and exporters during a meeting at the Jamaica Manufacturers and Exporters Association (JMEA) headquarters in downtown, Kingston. 

In the 24 trading days between October 2 and November 5, the weighted average selling rate of the Jamaican dollar moved from $134.80 to a new low of $141.10, a depreciation of $6.30 or 4.6 per cent. By Thursday, November 7 the Jamaican dollar had depreciated even further to a fresh new low of $141.89.

Martin noted that the reasons for the volatility in the market are varied. He said JN Bank is prepared to assist manufacturers and exporters to better understand the foreign exchange market, so they can focus on their primary purpose.

“Whenever there are capital market issues, such as a company issuing a bond in US dollars, institutional investors will take Jamaican dollars and demand US dollars, in order to invest in those instruments, and that puts pressure on the exchange rate,”  Martin explained, giving an example of an issue that affects the market.

He said several companies have been reporting foreign exchange losses as a result of the issues in the market. However, he maintained that with more information, and better understanding of some key operational issues within the export sector, then both manufacturers and exporters would be better able to plan and invest more of their energies in production. 

“As manufacturers and exporters, we don’t want you to spend a lot of time focusing on the issues in the market. We want you to focus your energy on driving production and exporting goods,” he emphasised.

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