Recommend a policy instead
published: Tuesday | April 27, 2004

THE EDITOR, Sir:

I AM curious regarding Mr. Seaga's intention to introduce arguments to peg the Jamaican dollar against the U.S. dollar. I don't believe he would offer such an idea if he was Prime Minister. I think they should continue to allow the dollar to float and recommend a monetary policy that can allow it to stabilise and appreciate rather then anchoring it to the U.S. dollar.

For this to work Jamaica and the U.S. have to be engaged in major activities and both countries have to be aligned in their economic policies. Anchoring to the U.S. dollar means if the U.S. raises interest rates, Jamaica would also have to raise interest rates, even if Jamaican monetary policies do not call for it. This can come at a high cost for Jamaica in a time when interest rates are high.

England attempted the same strategy under Thatcher and failed miserably when their ecomomic policies were not aligned with Germany and they decided to pull out of the European Rate Mechanism. The end result: devaluation of the pound.

I am, etc.,

GERMAINE BOLTON

germainebolton@hotmail.com

711 Harry S. Truman Dr,

Apt 213

Largo, Maryland

Via Go-Jamaica