How these Currencies are Struggling to remain relevant in the Caribbean Finance Markets.
How these currencies are Struggling to remain relevant in the Caribbean Finance Markets.
The debate as to whether Caribbean Currencies should drop US dollar or not, began sometime in last year with financial pundits arguing that the dollar has no benefit to Caribbean economies other than being used for imports and exports from the US. These concerns, however, come at a time when the Caribbean countries are struggling with hard economic conditions which are perceived to be as a result of rapid changes in terms of trade and the value of the very currencies in which such transactions are done. Below are seven countries whose values have been tied to fixed exchange rates with the US dollar and how this situation affects their economic growth.
Despite being shaken by the bad shock waves swaying the Caribbean financial markets, Bahamian Dollar is still struggling to remain competitive with US dollar. Currently, one Bahamian Dollar trades at 1.0006 against US dollar. This kind of performance is deemed to have adverse effects on exports and imports since businesses are now forced to stand on their own as they compete with foreign businesses in their home markets. It is also feared that shall this trend continue, then job market will also be affected with many youths likely to be rendered jobless.
Dominican Peso has been registering depreciation records against US dollar since the year 2000 with analysts projecting that this downward trend is bound to last as long as the fixed exchange rate issue is not solved. Though historically Peso has been having a weak value against the US dollar, the 5 percent annual devaluation is worrying. However, the currency exchange rates for Dominican Peso against other currencies seems to have stabilised and is currently trading at 46.6000 pesos per dollar.
As much as Jamaican economy depends on services which now accounts for close to 70 percent of its Gross Domestic Product, tourism, remittances and other latent sources to keep its economy afloat. Three years ago there was a concerted effort to address the uncertainty surrounding the direction of US Monetary policy with US Federal Reserve clearly indicating that interest rates must remain low. This stand impacted so much on investors and other business people. To date, Jamaica is still viewed as a weak market which is struggling to find comfort in their financial markets. Their dollar has been struggling to keep up with other competitive currencies however the competition hasn’t been favourable yet.
It is in no doubt that Cuba has been undergoing substantial economic challenges in the recent past and that’s why Cuban President Raul Castro told its citizens to prepare for tough times ahead. Currently, Cubans have been forced to cut their spending as the country is dealing with the effect of the cash crunch. They have also reduced oil imports from their longtime import partner Venezuela. This condition has, in turn, affected the performance of Cuban Peso against other external currencies and currently 1 Cuban Peso trades for 1.00 US Dollar, something that has dealt a blow to the Cuban finance markets.
East Caribbean Dollar.
For countries such as Dominica, Grenada, Antigua and Bermuda which uses East Caribbean dollar have been having a slight reprieve as the currency gained strength against the US Dollar in the past few months. East Caribbean Dollar has been pegged to the US Dollar at EC $2.7 per USD. This is a slight sign of stability compared to the past performance
Since last year Haitian Gourde has been losing its value against the U.S Dollar despite the country’s Central Bank assurance that people should not panic. Economists attribute this depreciation to huge government deficit which has results high import prices and high-interest rate from the banks. It is feared that more people will continue losing their jobs as even the daily wages are said to have reduced from 200 gourdes to 240.
Guadalupe relies heavily on France for subsidies and imports as much as its economy is sustained by agriculture and tourism. As a result, a lot of attention is always paid how its currency is doing against other currencies. The exchange rates between Us dollar and the Euro has been fluctuating and currently the dollar trades for $1.20 per Euro. British pound traded against the Euro at £ 1 to €1.14