The Editor, Sir:

What is the great obsession with the 'value' of the Jamaican currency? Why does every finance minister believe he must do all he can to protect the dollar? Successive finance ministers have sought to protect the dollar by raising interest rates as well as using the net international reserves (NIR) to stop the slide.

It has been proven over time that this method has not worked and, in fact, all it has done is to help those who have money to gain more riches.

I think the Government and the Bank of Jamaica should do something different and, more likely, very controversial.

1. Fix the exchange rate with immediate effect and hold it for a period of one year at a rate below current market rate, i.e. set to J$70 : US$1, with a review in nine months to determine if the rate should be even lower.

2. Reduce the interest rate on all new instruments to one that's less than 10 per cent per annum.

3. Reduce the interest rate on US dollar investment to less than three per cent per annum.

This, in my opinion, will have a number of effects.

The first is to burn speculators who had bought the dollar at $80 and who are expecting the rate to move to say $85 where they can now sell for profits.

This reduction in the interest rate on US dollar notes will remove the incentive to hold the US dollar in the hope of benefiting from both devaluation plus interest payments which are currently way above what exist for US dollars on the world market.

Remove the incentive

The third effect is to remove the incentive to park millions of dollars in government paper hoping for a big pay-off at maturity vs using that cash to create new jobs or expand existing business, which would help to stimulate growth.

The fourth will be to save the Government millions of dollars in interest rates, which it could then use to assist in subsidies or other programmes, helping the poor in our country to deal with the harsh economic climate that we are now facing.

We simply cannot allow a small group of people to hold this country at ransom any longer, and the Government should now take these very unpopular measures, which are radically different from anything that we have done before.

I am, etc.,

WINSTON WILLIAMS

patex_us2000@yahoo.com

Birdrock, Basseterre

St Kitts and Nevis