Jamaica’s Net International Reserves (NIR) has suffered a big, US$493.12 million decline in January to end the month at US$3.50 billion.

The decline in the NIR, which ended 2021 at just over US$4 billion, could be attributed to the Bank of Jamaica’s (BOJ) frequent intervention in the local foreign exchange market by selling off some of the reserves to defend the local currency from the precipitous slide in recent time.

This precipitous slide has resulted in the local currency slipping to an all-time high on Thursday (February 10) when the dollar traded at J$157.25 to US$1.

This latest decline in the NIR represents one of the single biggest monthly drop in the country’s foreign reserves in recent time and is a cause for concern at this time given the dire need for adequate reserves to defend the local currency, which has seen a sharp devaluation over the past year.

A country’s NIR is used as a benchmark to assess its economic strength and ability to withstand foreign exchange volatility. While the NIR has been declining, the amount recorded at the end of January 2022 is up US$524.85 million more than the US$2.98 billion reported at the end of January 2021.

At its current mark at US$3.50 billion, the NIR can support approximately 48.74 weeks of goods imports and 30.06 weeks of goods and services imports. The BOJ reports that Jamaica’s foreign assets also experienced a big fall to now total US$4.33 billion, which is US$497.77 million less than the US$4.83 billion reported in December 2021.

‘Currency & Deposits’ as of January 31, 2022, totalled US$3,792.23 million, reflecting an increase of US$14.71 million compared to the US$3,777.52 million reported in December 2021. ‘Securities’ were valued at US$336.94 million, which is US$3.56 million less than the US$340.51 million reported in December 2021.

At the same time Jamaica’s  ‘Special Drawing Rights & International Monetary Fund (IMF) Reserve Position’ also fell, now valuing US$206.46 million, US$508.91 million less than the US$715.37 million reported in December 2021. Liabilities to the IMF sat at US$827.98 million which reflected a month on month decline of US$4.65 million in comparison to the US$832.62 million recorded for December 2021.

Remittances inflows climbed by 17.5% in 2021

A continued upswing in remittance inflows in Jamaica is accredited to a growth of 17.5 per cent in inflows via remittance companies. This growth was aided by an increase in inflows via other remittances of 15.3 per cent for the month of December relative to November 2021.

Remittance inflows for the month of December amount to US$333.4 million, an increase of 6.5 per cent or US$20.3 million compared to the inflows for the same month last year. Overall remittance inflows for the January to December 2021 period totalled US$3.63 billion representing an increase of 19.5 per cent over the corresponding period of 2020.

The BOJ indicated that an outflow of US$237.2 million in 2021 led to an overall net flow of US$3,393.6 million, up 20.7 per cent relative to 2020. There are currently six primary agents in the remittance sector with 699 locations in operation.