More conservative bidding for J$ money market auction

Durrant Pate/ Contributor

The Jamaican dollar again depreciated last week, going down by 0.14 per cent relative to the American dollar, week over week. The ‘green back’ ended the trading week on Friday with its selling rate moving from J$154.82 on November 18, 2022 to J$155.04 on November 25, 2022.

This depreciation was a result of increased demand and supply seen in the market with the demand outweighing supply, thus inflating prices. The US dollar money market remains stable and moderately liquid.

Broker market demand for US dollar remains at 30-days and longer-tenured funds with some brokers offering as high as 5.50 per cent for one year to clients.

J$ money market tightens

Liquidity in the Jamaican dollar money marker, as represented by the Bank of Jamaica’s (BOJ’s) aggregated current balances, increased week over week (+$7.3 billion) to $17.3 billion as at November 24. Despite this, Jamaican dollar liquidity remains tight and competition for cash among market players continues to be intense.

At the same time, the average yield from BOJ’s competitive price auction declined to 8.47 per cent relative to 9.35 per cent in the prior week. The auction was oversubscribed.

Bids received totaled J$22.56 billion relative to offer size of J$15.0 billion. The highest bid rate for full allocation was 9.2499 per cent.

This auction was the last opportunity for institutional investors to shore up allocation for November, hence there was more conservative bidding, which resulted in a lower average yield.