Durrant Pate/Contributor

The high demand for the Jamaican dollar by businesses to meet tax obligations resulted in an appreciation of the local currency last week.

The foreign exchange market saw a 0.31% appreciation of the dollar over its American counterpart with the greenback selling for J$157.31 coming from J$157.85 at the start of last week. In the money market, JMD liquidity increased, as measured by the aggregated current balances held by deposit-taking institutions (DTIs). 

As at March 14, the total aggregate current balance amounted to J$97.94 billion, marking an 86.2 per cent increase compared to the previous week. Demand for money market instruments remains strong, as evidenced by the oversubscription in the Bank of Jamaica’s (BOJ) latest 30-day Certificate of Deposit (CD) auctions. 

Total bids amounted to J$38.36 billion relative to the J$24 billion issue size, implying a bid-to-offer ratio of 1.60x, compared to 1.05x the previous week. The corresponding average yield on the 30-day CD auction moved down to 5.96 per cent from 6.09 per cent. 

The next auction for 30-day CDs is today (March 19). Meanwhile, repos saw softer demand based on the BOJ’s 14-day repurchase agreement (repo) auction results. 

Eligible repo bids received totalled J$1.95 billion, slightly lower than the offer amount of J$2 billion at a bid-to-offer ratio of 0.975x.