Durrant Pate/Contributor

Amid falling interest rates and inflation demand for money market instruments remained high.

This was evidenced by the oversubscription in the Bank of Jamaica’s (BOJ’s) latest 30-day Certificates of Deposit (CD) Auction. Total bids amounted to J$49.4 billion relative to the $39.0 billion issue size, implying a bid-to-offer ratio of 1.27x (1.83x the previous week). 

Despite the oversubscription, the average yield from the BOJ 30-day competitive price auction inched up 3bps week-over-week to 6.73%. With the BOJ continuing to focus on enhancing market liquidity and the increased likelihood for further policy rate cuts in December, both locally and in the United States, yields on CDs are expected to continue an overall downward trend. 

There were two treasury bill auctions last week, a 91-day and 182-day with both having an offer size of J$700 million. The auctions were oversubscribed with bids received totalling J$2.8 billion and J$3B billion for the 91-day and 182-day tenors respectively. 

The average yield for the 91-day tenor was 6.28% and 6.17% for the 182-day tenor with the average yield falling by 113 bps (7.41%) and 115 bps (7.32%) respectively, relative to the November auctions. 

In the foreign exchange, the Jamaican dollar appreciated against the US dollar last week (0.46%) with the USD selling rate moving from J$157.26 on the 29th of November to J$156.53 last week. The JMD/USD exchange rate is expected to remain within this range during the Christmas season as USD supply remains robust due to increased tourism activity.