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Friday 24 November 2017
Letters to the Editor

Overvalued $ is a subsidy

THE EDITOR: I don’t know if the Government really does not get it.

An overvalued currency is a subsidy by any other name.

By having an artificially overvalued currency, all imports cost less than they really should.

So when the Government calls for us to tighten our belts and for us to consume less foreign goods is really an oxymoron, since it is the one in fact subsidising the exchange rate.

How does it expect us to cut back on imports when it is the architect of the forex demand?

By allowing the foreign exchange to find its own level, demand for forex will drop since goods will be more expensive, capital flight will be reduced, consumption of local goods will increase, and with it local employment.

Yes, there will be some fallout with a rise in the cost of living, but if we have to face reality with the fuel subsidy, is there any difference in facing reality with the exchange rate?



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