NIR surpasses US$2 billion
McPherse Thompson, Assistant Business Editor
For the first time in three years, the net international reserves (NIR) has again surpassed the US$2-billion mark, according to the latest data provided by the Bank of Jamaica (BOJ).
In July, the reserves rose by US$805 million, reflecting inflows from the Government of Jamaica's successful fundraising of US$800 million via a new bond placement on the international market, the central bank confirmed.
The NIR hit US$2.18 billion at the end of July, up from US$1.37 billion at the end of June.
The target for the first quarter of fiscal year 2013-14 ended June, under Jamaica's economic support programme with the International Monetary Fund, was US$1.15 billion, but the central bank had already achieved and surpassed that figure at the end of May, attributed mainly to an increase in foreign assets.
The end of July reserves are sufficient to purchase 28.13 weeks of goods, and 20.30 weeks of goods and services.
BOJ data show that the NIR at the end of July 2010 was US$1.73 billion, rising to US$2.15 billion at the end of July 2011, before dipping to US$1.48 billion at end-July 2012 and US$929.72 million at the end of July 2013.
With the drastic improvement in the NIR over the last month, the expectation was that the proceeds would positively impact the depreciating Jamaican dollar, a situation that did not materialise immediately, and not until the BOJ intervened in the market in mid-July to halt the slide.
eurobond payment due
The central bank aggressively announced its plan to intervene, breaking with tradition.
Some of the proceeds of the NIR are expected to finance repayment of the Government's €150-million bond, which matures in October, as well as refinance other debt and fund new investments.
The Ministry of Finance and Planning had initially planned to raise US$500 million from the bond offer, but decided to increase the take-up, to take advantage of the heavy subscriptions that greeted the offer.
After the bond issue, co-chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles, said it augurs well for the exchange rate to the extent that the BOJ may have been in the market in past months buying foreign exchange to build the NIR.
Addressing a press briefing at Sagicor Life Jamaica's offices in New Kingston on Thursday, Byles alluded to the July level of the NIR, saying it has "put the Bank of Jamaica in a very confident mood".
He added that he was quoting BOJ Governor Brian Wynter, himself a co-chair of EPOC, who feels he is in a stronger position to deal with one-off events that the country may face in the coming months and quarters, such as storm damage or international financial issues.
"So the NIR news is particularly good and heartening," Byles said.
On Wednesday, the average selling rate of the Jamaican dollar was $112.83, a decline from $112.74 - the point at which the BOJ intervened in July.