Durrant Pate/Contributor

Despite three B-FXITT intervention by the Bank of Jamaica (BOJ) last week, there was a marked increase in Jamaica’s money market balance.

At the end of the week a total of J$18.7 billion was in the market, as represented by the BOJ’s aggregated current balances, reflecting an increase of J$5.1 billion from J$13.6 billion reported in the previous week. Liquidity in the Jamaican dollar money market was absorbed by the three B-FXITT foreign currency auctions, amounting to US$90 million of which US$79.2 million was allocated.

This operation removed a total of J$79.2 billion from the Jamaica dollar money market. As a result, the Jamaican dollar appreciated by 0.62 per cent relative to the US dollar week-over-week, closing the week at a selling rate of J$155.37. 

The key reason behind the appreciation was the three B-FXITT intervention by the BOJ. This intervention partially plugged the increased demand for USD seen in recent weeks. The American dollar money market liquidity continued to fluctuate week over week, as broker market demand for the ‘greenback’ continued to increase for longer-tenured funds.

J$ money market auction

In the meantime, the BOJ carried out another 30-day competitive auction, which saw the interest rate inching up to 9.55 per cent versus 9.54 per cent in the prior week. The auction was oversubscribed with bids received totalling J$40 billion relative to the offer size of J$35 billion. 

The highest bid rate for full allocation was 10.145 per cent, which increased from 9.75 per cent in the prior week. Last week’s broker demand for Jamaican dollar remained relatively moderate, particularly for short-term funds, while rates in the retail market stayed consistent on Jamaican dollar placements.