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Many of the people who have commented on the call by Emile Elias, the veteran contractor and executive chairman of NH International (Caribbean), for a managed float with an exchange rate of $9 to US$1, are worried about the impact of the proposal on the price of imported goods and services:
* Minister of Finance, Davendranath Tancoo, states, “A devaluation...has the potential to decimate a large number of small and medium sized businesses at a time when we need more productive activity from them. At the same time, our citizens would face higher import costs, which would feed directly into domestic inflation.”
* UWI St Augustine Professor Emiritus, Patrick Watson, opines that depreciating the exchange rate to $9 to US$1 could trigger a speculative spiral downward, that hoarding and speculation could result and that more expensive imports could hurt consumers. Crucially, he acknowledges that “a devaluation simply earns more TT dollars for the same US dollar revenue, without increasing total foreign earnings.”
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