Barbados says it is determined to maintain local currency's fixed exchange rate with US dollar

BRIDGETOWN, Barbados – Barbados’ government does not support devaluing the Caribbean island’s currency and says it is determined to maintain its fixed exchange rate with the U.S. dollar.

The Barbados dollar has been pegged 2-to-1 to the U.S. dollar since the 1970s. But some analysts believe the currency of the economically struggling country should be devalued.

Moody’s Investors Service has downgraded the island’s government bond rating by two notches from Ba3 to B3, citing “anemic economic growth” and “limited prospects for improvement.”

The Barbados Ministry of Finance conceded that “a number of experts, including some in the ratings agencies,” believe devaluation is needed. But in a Saturday statement, the ministry said it is committed to the current exchange rate and “and will do what needs to be done to protect” the Barbados dollar.

The government says it is seeing signs of renewed economic growth. It says the rating agency’s downgrade decision ignored cuts in government spending and improvements in external accounts.