Durrant Pate/Contributor 

Despite the Bank of Jamaica’s (BOJ) announcement to gradually decrease its absorption of liquidity from deposit-taking institutions (DTIs), the domestic money market remained liquid. 

As of last week, a total of J$28.6 billion was in the market, as represented by the aggregated current balances held by DTIs. This was J$10.84 billion more than the previous week.

Demand for money market instruments remains high, evidenced by the oversubscriptions on the recent BOJ auction on July 16, 2024. There was a week-over-week increase in the BOJ’s 30-day Certificate of Deposit (CD) offer size, moving from J$9.0 billion to J$36.0 billion. 

The BOJ’s fixed rate 30-day CD competitive price auction was oversubscribed with bids received totalled J$52.6 billion relative to the offer size of J$36.0 billion. This implied a bid-to-cover ratio of 1.46, a reduction of 2.76 last week, largely due to the larger offer size. 

The average yield from the BOJ’s 30-day competitive price auction saw an increase to 9.47 per cent relative to 9.40 per cent in the prior week. The next auction date for the 30-day CD is Wednesday (July 24).

It is anticipated that the government will enter the market in late August based on its schedule for this fiscal year but no information has been released regarding the instrument and offer volume. 

In the foreign exchange market, the Jamaican dollar strengthened by 0.4 per cent in trading last week with the US dollar selling rate moving from J$157.62 to J$156.99. The strengthening of the Jamaican dollar was due to increased inter-dealer activity aimed at generating trading gains.