BOJ sells US$40 million to forex market
Bank of Jamaica (BOJ) today sold US$40 million to authorised dealers and cambios to augment supply in the market.
The BOJ says it has noted the public’s concern about the recent depreciation of the local currency but says based on Jamaica’s economic fundamentals, the bank does not expect that the recent pace of exchange rate movement will be sustained.
Further, the central bank says it expects that these impulses will subside and that normalcy will return to the market.
It explains that there has been an increase in demand for foreign currency due to the regular re-stocking by retailers for the Christmas season.
Additionally, it says there has been extraordinary demand relating to portfolio transactions.
Notwithstanding the recent depreciation, the BOJ says inflows into the foreign exchange market remained healthy.
It outlined that for October 2019, average daily inflow from earners was approximately US$31 million, in line with October 2018.
However, driven by the factors noted above, demand has outstripped this supply, the BOJ said.
The central bank says 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 BOJ said.
The bank says it remains committed to maintaining orderly conditions in the foreign exchange market and will only intervene to prevent disorderly market conditions.
It says that the bank is advanced in the development of a trading platform for foreign exchange that will introduce greater transparency.