The Bank of Jamaica (BOJ) will today (December 6) reintroduce its foreign exchange Net Open Position (NOP) cap.

The BOJ’s $8 billion NOP cap was temporarily removed in January 2020. The BOJ’s NOP is used to analyse foreign exchange risk, measures the difference between total assets and total liabilities in foreign currency.

Central Bank Governor, Richard Byles, who made the announcement at a virtual press briefing last month, disclosed 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 BOJ commits to continue reviewing these limits annually… and amending them, if it is deemed necessary.” Governor Byles said.

Commenting on the foreign exchange market, the BOJ reported that, “the exchange rate is fairly valued at its current levels, and the prospects for a stable market are good.”

The BOJ added that foreign currency flows remain strong with daily FX purchases and sales for the calendar year to date exceeding those of the previous year.