JAMAICA| BOJ Chief: 'We're in Full Control' - Governor Byles Calms Foreign Exchange Fears with US$6.2B reserves & FX Market explainer

While Trinidad Drowns in Forex Crisis, Jamaica Shows How Central Banking Should Work

MONTEGO BAY, August 21, 2025 - The message from Bank of Jamaica Governor Richard Byles today was crystal clear: stop panicking about the exchange rate because we've got this under control.

Standing before reporters and bank staff at the quarterly monetary policy press conference at the Bank’s headquarters in downtown Kingston, Byles delivered what amounted to a masterclass in central banking confidence—the kind that's designed to get nervous markets to quieten  down and behave.

But here's what makes his reassurances particularly compelling: across the Caribbean basin in Trinidad and Tobago, the twin-island nation is drowning in a foreign exchange crisis that has been choking their economy since 2015.

While Jamaicans worry about temporary volatility around the $160-to-$1 USD threshold, Trinidadians can barely access US$200 per day and companies wait three to nine months to exchange their TT dollar profits to U.S. dollars. It's a tale of two Caribbean economies—and a brutal lesson in what competent central bank management looks like.

The numbers tell the story starkly. Jamaica sits on US$6.2 billion in foreign reserves—148% of internationally adequacy levels. Trinidad, despite having a larger economy built on oil and gas exports, has only US$5.27 billion in reserves and falling.

In Fact Peak reserves were $11.49 billion in 2014 and the reserves have been declining steadily since their 2014 peak. 2023 reserves were $6.26 billion, down from $6.83 billion in 2022.

The country continues to grapple with declining foreign exchange reserves, with companies sometimes waiting three to nine months to exchange TT dollars to US dollars due to forex shortages that have persisted since 2015.

More tellingly, while Governor Byles speaks confidently about BOJ's ability to intervene and steady markets, Trinidad's Republic Bank just slashed credit card limits to US$2,500 per billing cycle—the latest desperate measure in a decade-long rationing nightmare.

The Reality Check: Jamaica's storm in a teacup vs. Trinidad's Catastrophe

When Byles talks about recent "volatility" in the forex market, he's referring to normal market fluctuations that any functioning market-determined financial system experiences.

Yes, the Jamaican dollar breached the psychological $160-to-$1 USD barrier earlier this year after quite some time of gently floating just below that mark, and yes, some skittishness followed. But contrast this with the dystopian reality facing Trinidad's citizens and businesses.

In Trinidad, the black market exchange rate has reached TT$8 to US$1, compared to the official rate, ($6.77-TTD to 1USD) as desperate citizens and businesses scramble for foreign currency.

Trinidadians have resorted to opening foreign bank accounts and using services like WISE just to conduct basic international transactions.

The situation has become so desperate that Guyanese authorities have reportedly said they don't want any more TT dollars because Trinidadian companies were trying to access forex in Guyana out of desperation.

Meanwhile, Jamaica's BOJ has sold US$1.2 billion through its B-FXITT facility over the past 12 months—not because of crisis, but because of proactive market management. This is intervention with purpose, not panic.

The difference is instructive. Jamaica's "volatility" saw the exchange rate depreciate by 2.5% in the first half of 2025, a slight uptick over usual levels.

Trinidad's crisis has seen their currency become practically worthless on the street, with businesses and individuals creating elaborate workarounds just to access basic foreign currency services.

The US$6.2 Billion Fortress

Here's where the contrast becomes even starker. Byles announced that Jamaica's gross international reserves stand at a "historically high and healthy level of US$6.2 billion"—148% of what international experts consider adequate.

For a small island economy traditionally dependent on imports, this represents genuine financial security.

Trinidad's reserves, meanwhile, have fallen to US$5.27 billion as of March 2025, down from US$5.29 billion in February.

But here's the kicker: Trinidad has a much larger economy, built on massive oil and gas exports that should theoretically generate far more foreign exchange than Jamaica's tourism and bauxite sectors.

The difference isn't just in the numbers—it's in how these reserves are managed and deployed.

Jamaica's BOJ uses its reserves strategically, intervening when necessary to sell into the market and smooth out market volatility caused by periodic lumpy FX demand, while allowing the currency to find its natural level in the market-driven floating exchange rate model the Government of Jamaica has maintained as official policy and handed to BOJ to run .

Trinidad's Central Bank, by contrast, has been fighting a losing battle to maintain an overvalued currency through managed float exchange controls and rationing—the classic recipe for black market development and economic distortion.

What This Means for the Average Jamaican

Strip away the central banking jargon, and here's what Byles was really telling the Jamaican people yesterday: your money is safe, your purchasing power is protected, and your economy is being managed by professionals who understand how modern currency markets work.

For the average Jamaican, worried about rising prices or planning overseas travel, this matters enormously. While their Trinidadian counter-parts queue at banks hoping for US$200 allocations or pay black market premiums, Jamaicans can still access foreign currency through normal banking channels.

Yes, the exchange rate fluctuates, but within normal parameters for a small, open economy vulnerable especially to international dynamics not of its own making.

The broader lesson here isn't just about foreign exchange—it's about institutional competence. Jamaica's central bank has learned from decades of currency crises and built a system that can absorb shocks without breaking.

Byles and other central bank officials testified at the press conference that its Bank of Jamaica Foreign Exchange Intervention Trading Tool – the B-FIXITT facility – has stood the test of time as is working quite well.

Trinidad's approach of defending an artificial exchange rate through rationing has created exactly the kind of economic distortions that destroy confidence and fuel parallel markets.

When Governor Byles makes the pointed suggestion that  BOJ has the capacity to calm fears in the Foreign Exchange market with its capacity to intervene and steady the market so that the rate cannot run away.

He's not just making promises—he's pointing to a track record that stands in stark contrast to the chaos unfolding elsewhere in the Caribbean.

The question for Jamaica isn't whether the BOJ can manage forex volatility—yesterday's performance data proves they can.

The question is whether Jamaicans fully appreciate having a central bank that actually works, especially when their Caribbean neighbors would give anything for such competent economic management.

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