The Bahamas’ fixed exchange rate policy, pegging the Bahamian dollar one-to-one with the US dollar, has been pivotal in fostering positive outcomes in price stability amidst global inflationary pressures.
Central Bank Governor John Rolle highlighted this during his address at the Bahamas Business Outlook Conference at the Baha Mar resort yesterday.
Rolle emphasized: “Maintaining a fixed exchange rate necessitates upholding credibility regarding the adequacy of foreign exchange reserves safeguarding the peg. The stability of the exchange rate has been instrumental in The Bahamas’ success in achieving price stability, enabling the adoption of effective low inflation rate policies from our major trading partner, the United States. Our adherence to anchoring the exchange rate to the US dollar has served us well in meeting our inflation mandate.”
He further elaborated: “Exchange rate stability significantly influences the attractiveness of our jurisdiction to foreign investors. Investors prioritize avoiding exchange rate losses and ensuring the safety of lending to a country in foreign currency, where exchange rate fluctuations could pose risks.”
Governor Rolle also revealed the Central Bank’s commitment to advocating exchange control reforms and expressed support for corporate income tax. However, he stressed the importance of carefully determining the specifics of such taxation policies.