JAMAICA | Gross International Reserves at US$4.7 Billion, dollar depreciates 6.1%

JAMAICA | Gross International Reserves at US$4.7 Billion, dollar depreciates 6.1%

KINGSTON, Jamaica, November 22, 2021 - The Bank of Jamaica (BOJ) is reporting that the country’s gross international reserves, as at November 17, totalled approximately US$4.7 billion. Governor, Richard Byles, said the figure represents the equivalent of 143.8 per cent of the level considered adequate.

Deputy Governor with responsibility for Banking, Currency Operations, and Financial Markets, Natalie Haynes, indicated that net international reserves (NIR), at the end of October, totalled US$3.9 billion, adding that “we expect stability for this month [November].”

Both were speaking during the BOJ Monetary Policy Committee (MPC) digital quarterly media briefing on Friday (November 19).

Mr. Byles said the Central Bank estimates that gross reserves will remain healthy.

This, he noted, will be supported by a current account deficit of the balance of payments, ranging between one and three per cent of gross domestic product (GDP), which he pointed out is a “sustainable level by traditional measures.”

“This reflects [previously] mentioned expectations for a recovery in tourist arrivals and spending [from the impact of the coronavirus (COVID-19) pandemic],” the Governor said.

Mr. Byles also advised that the BOJ’s $8 billion net open position (NOP) cap, which was temporarily removed in January 2020, will be restored effective December 6, 2021.

Net open position, which is used to analyse foreign exchange risk, measures the difference between total assets and total liabilities in foreign currency.

Mr. Byles told journalists, however, that the cap will be adjusted from the $8 billion limit to an asymmetric one, corresponding to a $4.5 billion ceiling for long NOP positions and $7 billion for shorter ones.

“The Bank commits to continue reviewing these limits annually… and amending them, if it is deemed necessary,” he said.

In the meantime, the Bank of Jamaica (BOJ) says there is an adequate supply of foreign exchange to meet market demand, as flows continue to be healthy.

Governor, Richard Byles, has reported that up to November 17, daily purchases by authorised dealers and Cambios averaged approximately US$36 million, which was higher than the US$31 million recorded for the corresponding period last year.

“At the same time, daily sales to end-users over the same period averaged close to US$35 million, above the US$27 million recorded a year earlier. Businesses and individuals in Jamaica, who require foreign exchange have been able to access it,” he noted.

He said that the BOJ continues to intervene in the foreign exchange market when temporary shortfalls are identified.

He advised that total BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT) flash sale operations and direct sales to the energy sector for the calendar year, to October 31, totalled US$675.4 million.

 Mr. Byles noted that  the foreign exchange rate, as at November 17, was J$159.79 to US$1. This, he said, represented a 6.1 per cent depreciation, noting that this is broadly similar to the corresponding period last year.

Mr. Byles said that the rate, at existing currency levels, is “fairly valued”, with the prospects for a stable market being “good”.

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