Wed | Sep 19, 2018

BOJ cuts daily foreign exchange sale requirement for cambios and authorised dealers

Published:Wednesday | October 25, 2017 | 9:35 AM
Bank of Jamaica.

The Bank of Jamaica has announced that effective today it has reduced the amount that authorised dealers and cambios are required to sell to the central bank from their daily purchases of foreign exchange.

According to the BOJ, for both authorised dealers (ADs) and cambios, the amount required to be sold to the central bank will be reduced by five percentage points.

ADs and cambios currently sell 25 and 20 per cent respectively, of their daily foreign exchange purchases to the central bank in what is called a “surrender” arrangement under the public sector entity (PSE) facility.

The reduction will result in the PSE facility surrender requirement falling to 20 per cent for ADs and 15 per cent for cambios.

Authorised dealers and cambios also are required to sell five per cent of their daily foreign exchange purchases to the BOJ in what is called the regular surrender requirement. This regular surrender requirement will remain unchanged at five per cent.

“The reduction in surrender requirements, in conjunction with the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT), is in keeping with (banks) ongoing reform to make its interaction with the foreign exchange market more transparent, market-based and to improve the efficiency and transparency of the FX market,” said the central bank.

The BOJ said it expects a reduction in surrender requirements to improve liquidity conditions in the FX market and contribute to its deepening.