Durrant Pate/Contributor

Jamaica’s money market liquidity shrank by J$5.5 billion to J$21.2 billion as of last week, primarily attributed to the interventions by the Bank of Jamaica (BOJ) in the foreign currency (FX) market.

This is in addition to fluctuations in demand for both Jamaican dollar (JMD) and US dollar (USD) placements. The BOJ intervened in the FX market twice last week using its B-FXITT tool, thus providing a total of US$60 million.

This has caused a contraction of J$9.3 billion in the money market. On the demand side, money market rates continue to reflect demand for JMD placements, while the USD money market liquidity experienced fluctuations week-over-week.

This is resulting in an increase in broker market demand for USD longer-tenured funds. Certificates of Deposit (CDs) rates during auctions continued to rise last week and there are more upcoming short-term offers from the BOJ and Government of Jamaica (GOJ)

Slight increase

The average yield observed in the BOJ’s 30-day competitive price auction saw a slight increase, reaching 9.47 per cent in comparison to the previous week’s 9.22 per cent. The auction was oversubscribed with, bids amounting to J$35.9 billion against an offering of J$28 billion.

The highest bid rate for full allocation rose to 9.87 per cent, up from the previous week’s 9.69 per cent. There was a 30-day CD auction on Wednesday. Furthermore, the BOJ made another auction with J$25 billion for its two-year fixed-rate CD to manage liquidity, resulting from the maturity of the BOJ 3.75% USIN bond today.

The GOJ has also announced an offer for a total of J$1.4 million in T-bills, allocating J$700 million each for the 91-day and 182-day tenors.