The Bank of Jamaica (BOJ) will be rolling out the first phase of its foreign exchange trading platform this month, which seeks to promote greater inter-bank trading and increase the depth and liquidity of the market.
This was announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, as he opened the 2020/21 Budget Debate in the House of Representatives on March 10.
Dr. Clarke said the BOJ is also seeking to introduce derivative products, such as forwards and swaps, to assist in improving the functionality of the foreign exchange market and the experience of end users.
Furthermore, the Bank will increase the limit below which regulatory approval is not required for the issue of United States dollar (USD) securities.
Dr. Clarke said that the measures being undertaken are aimed at improving the efficiency and depth of the foreign exchange market.
“Jamaica operates a market-determined exchange rate. The BOJ has enacted many reforms designed to deepen the market, improve its functioning and allow the BOJ to reduce its footprint in the market,” he noted.
Meanwhile, Dr. Clarke said the central bank has gross reserves of US$3.6 billion and non-borrowed reserves in excess of US$2.5 billion. He further noted that the BOJ’s non-borrowed reserves increased by more than US$1 billion since October 2016.
“The data show that, to date, annual inflows of foreign exchange have been sufficient to meet Jamaica’s needs. The proof lies in the fact that Jamaica has been able to increase its foreign exchange reserves while also rapidly increasing its non-borrowed reserves,” the Finance Minister pointed out.
“Our market is developing, no doubt with teething pains. However, as it develops, there has been less need for the use of precious reserves in the market. The reserves in our central bank are a public resource that belongs to all Jamaicans. We need our reserves to protect us against shocks in the external environment,” he said.