ECCB resists calls to devalue EC dollar

Antigua Observer:- The Eastern Caribbean Central Bank says it continues to resist ill-advised calls to devalue the EC dollar which has now been pegged to the US dollar at 2.70 for forty years.

Deputy Director of the Research Department Hamilton Stephen says there is no good reason to devalue the EC currency.

“We have heard calls from various sources for a considered devaluation. Those have never been justified by the economic fundamentals. Our macro economic fundamentals have always indicated that the exchange rate is just about right”.

Stephen says the stability of the currency has helped to provide a positive environment for economic development in the OECS.

“Value is important. Stability is critical for economic advancement and growth, to facilitate commerce, to facilitate trade, to facilitate investment. We need some assurances that our investments and our savings will not lose value. So that peg is basically a guarantee to our traders that the revenue from our exports is fairly predicable. The costs from our imports are very predictable. Most of all, those who invest in our region, it’s almost a guarantee that the value of your investment will not be diminished through a loss on your exchange rate”.

The Deputy Director at the ECCB says the decision to switch the EC peg from the pound sterling to the US dollar has been proved to be for the benefit of the region.

“The evolution of the political arrangements and the emergence of trading partners. Our case evolved in a manner where we would get most of our imports from the US and our exports were going to Britain. In an attempt, I can only assume, to stabilize prices and ensure that you don’t have too much fluctuation in terms of our import prices because we are importing so much. We became pegged to the US. It made sense then to peg to the US dollar”.