Durrant Pate/Contributor

The Bank of Jamaica’s (BOJ) intervention in the foreign exchange market, through its B-FXITT facility, has climbed to approximately US$887 million, which represents the value of United States dollars that have been injected into the market by the central bank since the start of the year.

As a result of this move, BOJ Governor Richard Byles declared that “the foreign exchange market has remained relatively stable within a band over the last four months, reflecting continued strong tourism and remittance flows, as well as the actions taken by the bank”.

Continuing, Byles told journalists at his quarterly news briefing yesterday that “to prevent undue volatility in the foreign exchange market, BOJ has sold approximately US$887 million via its B-FXITT facility for the 2023 calendar year to end-October”.

He advised that when these sales are set against BOJ purchases, the result is that the bank’s net purchased amounted to approximately US$893 million over the period, almost double the amount purchased over the same period in 2022. One of the positive outcomes of the stable exchange rate, the BOJ Governor explained, is that it has helped to anchor inflation expectations.

In the BOJ’s latest survey of inflation expectations, it shows that less than 16.0 per cent of the respondents indicated that movement in the exchange rate was the most important factor behind their view of future inflation, compared to 24 per cent in the previous survey. In addition, respondents indicated that communication by the central bank has played a greater role in informing their views about inflation.

This, he said is encouraging. Turning to the general economy, Byles highlighted the resilience of the economy, which continues to expand despite the impact of drought conditions on the agriculture sector. He referred to the Planning Institute of Jamaica’s announcement on Tuesday that the economy grew by 1.9 per cent for the July to September 2023 quarter, with signs that the economy should continue to expand in the December 2023 quarter.

He pointed to the low unemployment rate for July of 4.5 per cent, supported by anecdotal information that with wage adjustments in selected private-sector industries, the domestic labour market remains tight. Looking ahead, the BOJ continues to project that real Gross Domestic Product (GDP) will grow by 1.0 to 3.0 per cent for FY2023/24, and between 1.0 to 2.0 per cent over the medium term.