Jamaican businesses say it is a bit easier to acquire foreign exchange to meet financial obligations, but that the market is not fully normalised.
Andrew Mahfood, group financial director of beverage company Wisynco, said since the IMF signaled that a loan agreement with Jamaica was likely to be approved, there is “definite ease of getting foreign exchange nowadays”.
The IMF announced on April 8 that the IMF Executive Board would consider its recommendation by this month end.
Mahfood said Wisynco was unable to source US dollars in the market in the first calendar quarter and was forced to dip into its reserves to cover its needs.
“I think the country realises that once it goes to the IMF Board there will be an opening up of doors to multilateral funding and funding from other agencies, so some amount of confidence has been regained,” he said.
“What you find is that some persons who accumulated US earlier may be unwinding their position that they had built up and trying to offload some at the present rate.”
The JMD has regained more than 30 cents of its value, having retreated from a high of J$99.81 per USD. Additionally, there are more sellers in the market than buyers, a reverse of the conditions that prevailed up to the end of March.
At the end of March, year-to-date sales volumes totalled US$1.64 billion, but was eclipsed by demand totalling US$1.67 billion.
However, at April 24, sales volumes year to date amounted to US$2.37b, whereas total demand was lower at US$2.26b.
Average daily sales into the market during the review period was just over US$30 million. In the first quarter, daily sales were south of that average, falling as low as US$16.9 million at one point.
Still, president of the Jamaica Chamber of Commerce, Francis Kennedy, said that while supplies of USD have improved, there is still not enough to meet the demand of its membership, comprising traders, retailers and manufacturers.
“Even though there is more US selling in the market than before, it is very difficult to get the foreign exchange we need. Yes, the pressure has eased up now, but it is still not where we want it to be,” he said.
Kennedy said manufacturers purchase most of their raw materials from overseas and due to their inability to source US dollars to pay suppliers, a backlog has developed. Businesses have been forced to seek extended credit arrangements with their creditors as a result of the shortage.
“If March had continued, as a country we would be been in a lot of trouble, because we can’t keep going back to our suppliers and asking them to extend the extension they had given already. There is so much extension you can get and no more,” the JCC president said. “They will want their monies as well; they, too, have bills to pay.”
The price of the US dollar is almost seven dollars more expensive than it was at the start of the year – moving from J$92.97 to peak at J$99.81 – but shift in the value of the currency, said Francis, is something businesses tend to take in stride.
“I don’t think they are complaining too much. They can live with that – not that they are okay with it, but they can chew on that one,” he said.