Total outstanding under BOJ FX swap arrangement is US$7 million

The Bank of Jamaica (BOJ) is reporting that there were no confirmed swap transactions last week.

In addition, the BOJ reports that no swaps will mature via this arrangement this week. The total outstanding under the BOJ FX Swap Arrangement is US$7 million.

The BOJ introduced the new swap arrangement in January last year as an instrument available to foreign exchange authorised dealers. This instrument is intended to enhance the BOJ’s management of the foreign exchange market and provides US-dollar liquidity to the market through authorised dealers via a swap arrangement.

Under the FX Swap Arrangement, the BOJ agrees to sell US dollars to authorised dealers within a pre-determined limit, at the prevailing market rate with an agreement to buy back the same amount of US dollars at a time in the future at an agreed forward rate. In addition to its usual B-FXITT operations, the BOJ utilises the FX swap arrangement to smooth out excess volatility and restore orderly conditions in the market.

Indication that sufficient FX in the market

The fact that there has been no FX swap confirmed is an indication of sufficient hard currency in the market to satisfy local demand, which has been a point repeatedly, stated by the BOJ. According to the BOJ, the current FX market volumes are very healthy and there is no shortage of FX in the system. 

The BOJ argues that the FX market should demonstrate cautious and responsible behaviour noting that the robust level of remittance inflows added to the vigorous volumes present in the market. Also the strength of the BOJ’s foreign reserves have all combined to indicate clearly that the economy at this time has more than enough FX at its disposal. 

The BOJ contends that there is sufficient FX in the market to safely navigate Jamaica rough waters of the current COVID-19 crisis.