Durrant Pate/Contributor

The Bank of Jamaica (BOJ) four interventions in the local foreign exchange market last week led to the Jamaican dollar appreciating week-over-week by 0.25% relative to the American dollar (US$).

The appreciation saw the Jamaican dollar (JMD) ended the trading week with the US dollar selling at a weighted average price of J$157.23. The BOJ intervened from May 7-10 via its B-FXITT operations, thus improving hard currency supplies to the FX trade.

Some US$120 million was injected into the FX market to address the demand and supply imbalance. In the USD money market, liquidity remained reasonable with most brokers’ demand remaining high for longer-tenured funds. 

Money market operations

The local money market remained moderately liquid. As of May 10, a total of J$28.69 billion was in the market, as represented by the aggregated current balances held by deposit-taking institutions (DTIs). This was J$3.39 billion higher than on May 3. 

On the demand side, broker demand for JMD remained consistent for both short-term and long-term funds. With demand for money market instruments remaining high, evidenced by the oversubscriptions on the recent BOJ auctions, yields continued to decline. 

The average yield from the BOJ’s 30-day competitive price auction fell to 10.38 per cent relative to 10.41 per cent in the prior week, marking the fourth consecutive week of decline. The auction was oversubscribed with bids received totalling J$51.8 billion relative to the offer size of J$40 billion. 

This implied a bid-to-cover ratio of 1.29, a decrease relative to 1.36 the prior week. The highest bid rate for full allocation was 10.85 per cent, which increased from the 10.77 per cent highest bid the prior week.

The next auction date for the BOJ’s 30-day Certificate of Deposit is May 15.