The Jamaican dollar appreciated last week, resulting in the exchange rate falling to $150.26 for US$1 on September 10.
This was due to part to a fall-off in US dollar demand during the just ended week. The appreciation in the local currency was also due to an increase in the inflows from tourism and remittances.
The Bank of Jamaica (BOJ) is anticipating the receipt of International Monetary Fund US$520 million in the allocation of Special Drawing Rights (SDR) by end September 2021 could also trigger a further appreciation.
The US$520 million in SDR flow will buttress Jamaica’s Net International Reserves, which will provide support to the economy during the current uncertain economic times.
The allocation is timely given the fact that the recent spike in COVID-19 cases in Jamaica, the subsequent lockdowns and the restriction on non-essential travel from the UK will likely delay the recovery in the tourism industry and put a strain on the supply of foreign exchange.
The money market for US dollar was generally moderate last week with much of the demand in the broker market being for 30 days and longer tenured fund. As it regards Jamaican dollar liquidity, the conditions were still tight.
This was owing to the fact that some broker market players opting to lend for tenures overnight or up to a week only. With the tight liquidity conditions, rates were competitive.
The average yield of the BOJ’s competitive auction on its 30-days Certificates of Deposit had an uptick of 1.71 per cent relative to 1.51 per cent in the prior week. The highest bid for full allocation was 1.99 per cent.
A total of J$11.5 billion was offered in the auction, while the total bids received was J$19.46 billion.