Bloomberg News

Worst Western Hemisphere Currency Rout Prompts Jamaica Note Sale

April 09, 2013

Jamaica plans to sell dollar-linked notes to shore up investor confidence and stem the biggest currency decline in Latin America and the Caribbean this year.

The Bank of Jamaica offered one-year, 4.75 percent bonds with payments tied to the U.S. dollar to help curb the supply of the local currency after central bank reserves fell below $1 billion for the first time in 12 years and the government restructured domestic notes for the second time in three years. The bank said it will take further steps if needed to arrest the 6.6 percent tumble in the Jamaican dollar this year.

Jamaica’s economy contracted 0.9 percent in the last three months of 2012, the fourth-straight quarterly decline, while the ratio of debt to gross domestic product soared to 140 percent. Central bank reserves fell to $884 million in March from more than $2.5 billion in 2011. The country may receive as much as $958 million from the International Monetary Fund after restructuring about $9 billion in local debt this year, the lender said yesterday.

Demand for dollars is “related to uncertainty about IMF support for the country’s economic program,” the bank said in a statement today. “That uncertainty is now in retreat.”

To contact the reporter on this story: Eric Sabo in Panama City at esabo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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