THE JAMAICAN dollar lost 63 cents in its buying rate and 11 cents in the selling rate up to Monday, it regained some ground yesterday. At least one dealer has suggested that the local currency has now stabilised and had only been responding to excess liquidity.
At the same time, the Bank of Jamaica (BoJ), which has been aggressively selling US dollars in the foreign exchange market since mid-May, has declined to say what has been the total cost of the intervention so far.
Earle Harriott, an executive member of the Cambio Dealers Association of Jamaica, said the dollar has been "pretty stable" and although it lost a few cents over the past few days, it was expected to "come back on track" yesterday. He explained that the slight depreciation was caused by excess amount of Jamaican dollar liquidity in the market, which itself was caused by some instruments maturing last Friday. There were, however, signals that the liquidity was drying up and once that happened "we expect the dollar to remain stable in its current band," Mr. Harriott said.
NARROW BAND
The dollar has been trading in the narrow band of between $59.35 and $59.47, suggesting there was stability, he said.
Mr. Harriott said the BoJ has, in recent days, been intervening in the market by selling the US dollar for about $59.30 with the expectation that the market will resell at about $59.35.
BoJ Governor Derick Latibeaudiere said last week, in response to queries about the bank's intervention in the foreign exchange market, that "we rarely sell below the market." In the central bank's effort to provide sufficient liquidity in the market, he said, "we have intervened at all times at the market rate."
At the end of trading yesterday, the average selling rate of the Jamaican dollar was $59.41, a gain of five cents on Monday's rate, while the average buying rate was $59.07, a gain of 18 cents over the previous day's.
The average selling rate of the pound sterling was $96.82 and the buying rate $94.68, while the Canadian dollar was sold for $43.27 and bought for $42.12.
