The Central Bank is expecting normalcy to return to the foreign exchange market consequent on the sale of US$40 million to authorised dealers and Cambios, via the Bank of Jamaica FX Intervention Trading Tool (B-FXITT) on Tuesday (November 12), to augment supply.
This comes against the background of recent fluctuations in the value of the Jamaica dollar against the US currency, and public concern about the depreciation in the exchange rate.
In a statement on Tuesday, the BOJ attributed the fluctuations to increased demand for foreign currency “due to regular restocking by retailers for Christmas.”
Additionally, the Central Bank said there has been “extraordinary demand” relating to portfolio transactions.
“Notwithstanding the recent depreciation, inflows into the foreign exchange market remained healthy. For October 2019, average daily inflow from earners was approximately US$31 million, in line with October 2018,” the BOJ stated.
It noted, however, that demand has outstripped supply due to the aforementioned factors.
“Based on Jamaica’s economic fundamentals, the Bank does not expect that the recent pace of exchange rate movement will be sustained. The current account deficit of the balance of payments is expected to remain low and sustainable, albeit slightly higher than the deficit recorded in 2018.
“Accounting for the impact of foreign direct investment, inflows will be sufficient to cover this deficit,” the Central Bank pointed out.
The BOJ said it remains committed to “maintaining orderly conditions in the foreign exchange market and will only intervene to prevent disorderly market conditions”.
Additionally, the Bank said work is advanced on its development of a trading platform for foreign exchange that will introduce greater transparency.
“We continue to urge Jamaicans to make use of forward contracts in managing their foreign exchange needs,” the BOJsaid.
