Gareth Manning, Gleaner Writer
CHINA'S REVALUATION of its currency will have little immediate impact on Jamaican businesses, but watch out, business analysts say.
The yuan, China's national currency, was revalued by some two per cent yesterday under pressure from the United States government and the European Union. Local analysts say the adjustment could ultimately impact significantly on local businesses.
Spokesperson for the Jamaica Chamber of Commerce, Keith Collister says initial shift should not affect prices immediately. But he says it is likely the currency will continue to revalue over time and may provide opportunities for Jamaican manufacturers to take advantage of United States restriction on Chinese textile imports.
But as the revaluation shift rises, Collister expects that prices will rise.
"If the currency continues to revalue this could have a longer-term impact as Chinese producers are likely to eventually raise their prices," he says.
In 2002, Jamaica's imports from China amounted to US$65,957,000. This was a 13 per cent growth in imports from China between 1998 and 2002, a Private Sector Organisation of Jamaica (PSOJ) analyst said. Imports are mainly comprised of T-shirts, tyres for buses and cars and computer inputs and outputs.
SHIFT NOT GREAT ENOUGH
Meanwhile, Jason Morris investment research and sovereign risk analyst at the Jamaica Money Market Brokers, says the shift in the currency is not great enough to have a major impact on Jamaica as the revaluation is merely a policy shift stemming from pressure on the Chinese government by the United States and the European Union so their producers can export more to the country.
He says positive and negative repercussions should arise from the revaluation, however, as the United States earns more from exports to China. Morris speculates that the U.S. should buy more products from the Caribbean as it grows richer.
On the contrary he expects U.S. bond yields to rise.
"It's not like it's a ten per cent shift, its only a 2.1 (per cent shift), which is very minuscule," he says.
