By Durrant Pate/Contributor

Demand for money market instruments in Jamaica remains high, evidenced by the oversubscriptions on the Bank of Jamaica’s (BOJ) FX auction last week. 

The BOJ’s fixed rate 30-day CD competitive price auction was oversubscribed with bids received totalling $45.52 billion relative to the offer size of J$37 billion. This implied a bid-to-cover ratio of 1.23, higher than the 1.13 last week. 

The average yield rose to 9.91 per cent relative to 9.88 per cent in the prior week. This yield, however, is still far below the yields north of 11 per cent seen earlier this year. 

In the meantime, the Jamaican dollar money market remained liquid. As of July 5, 2024, a total of $21.25 billion was in the market, as represented by the aggregated current balances held by deposit-taking institutions (DTIs). This was $17.98 billion more than on June 28. 

JMD depreciates

In the foreign exchange market last week, the Jamaican dollar depreciated by 0.61 per cent relative to the American dollar week over week with the ‘greenback’ selling rate moving from $156.72  to $157.25 on July 5. The moderate depreciation was likely due to reduced trading last week given the passage of Hurricane Beryl, which resulted in business closures across the island. 

That said, with the Jamaican dollar trading above the $157 mark, the BOJ could intervene in the market through its B-FXITT programme in the coming weeks, as prices over this amount are usually not deemed attractive to end-users.