BOJ Has Enough Reserves to Maintain Stability in Foreign Exchange Market – Governor

Bank of Jamaica (BOJ) Governor, Richard Byles, has given the assurance that the bank has enough foreign currency reserves to satisfy demand by selling into the foreign exchange market, and in so doing, is able to maintain the exchange rate at a relatively stable level.

He said that as at August 12 this year, Jamaica’s gross international reserves stood at a historically high and healthy level of US$6.2 billion, or 148 per cent of the measure considered adequate.

Speaking at the bank’s quarterly press conference at its headquarters in downtown Kingston on August 21, Governor Byles noted that the foreign exchange market recently experienced slightly higher-than-usual volatility, which was the result of temporary factors.

He said the exchange rate at the end of June depreciated by 2.5 per cent, compared with the rate at end-December 2024, which was faster than the pace for the previous six months.

“This unsteadiness was particularly evident in April and May, underpinned by temporary factors, including uncertainties about developments in the global economy, the movement in the rate through the psychological threshold of $160 to $1, and a narrowing of the gap between domestic market interest rates and those in external markets,” Mr. Byles explained.

He added that the bank remains committed to presiding over the policy of maintaining a flexible exchange rate regime, noting that so long as inflation in Jamaica, over the long run, exceeds that of its main trading partners, the public should expect that the exchange rate will fluctuate around some trend.

Mr. Byles, in informing that the BOJ’s Monetary Policy Committee (MPC) considered developments in the foreign exchange market during its most recent meeting last week, noted that in the context of uncertainty caused by developments in the global economy, expectations about exchange rate depreciation in Jamaica may have increased during the June 2025 quarter.

“This was indicated by financial actors increasing their net open positions – that is, the difference between their foreign currency assets and foreign currency liabilities – in response to changes in their views about foreign exchange risk. In addition, the dollarisation ratio increased in May from the lowest level in the past five years, which was recorded in February 2025. This dollarisation ratio, which is the stock of foreign currency financial assets held in the system by the public, as a percentage of their total financial assets, is also a measure of the public’s view about exchange rate risk,” he said.

He described the Bank’s participation in the foreign exchange market as remaining broadly unchanged since May this year. He informed that cumulatively, the BOJ has sold US$1.2 billion via its Bank of Jamaica Foreign Exchange Intervention Trading Tool (B-FXITT) facility over the 12 months to end-July 2025, compared to US$956 million over the 12 months to end-July 2024. However, the Bank net purchased approximately US$931 million over the current period.

“At the same time, the current account of Jamaica’s balance of payments remains in surplus, reflecting continued growth in remittance inflows and tourism arrivals, despite the policy changes in the external environment. In this context… supported by strong economic fundamentals and BOJ’s intervention to smooth out the volatility in the foreign exchange market, expectations have normalised. Since the end of June, the pace of depreciation has fallen and there has been a reduction in the market’s net open position,” Mr. Byles noted.

The BOJ’s Monetary Policy Committee announced on Wednesday, August 20 its monetary policy decision to maintain the policy rate at 5.75 per cent per annum and continue to pursue measures to preserve relative stability in the foreign exchange market.