Gross International Reserves Remain Healthy

Jamaica’s gross international reserves remain substantially healthy at US$4.4 billion, Bank of Jamaica (BOJ) Governor, Richard Byles, says.

He noted that the reserves were buoyed by Central Bank net purchases of US$940 million from the local foreign exchange market.

“The Bank projects that the gross reserves will continue to remain adequate in the medium-term,” he said.

Mr. Byles was addressing the Bank’s recent quarterly media briefing at the BOJ Auditorium in downtown Kingston.

The Central Bank Governor further advised that the value of the Jamaican Dollar value against its United States (US) counterpart increased by 1.4 per cent as at February 16, 2023, compared to a four per cent depreciation for the corresponding period last year.

He noted that the foreign exchange market has remained “relatively stable”, partly reflecting BOJ actions taken recently in response to higher than targeted inflation.

The Statistical Institute of Jamaica (STATIN) reports that the inflation rate in January 2023 was 8.1 per cent, which was 1.3 percentage points below the 9.4 per cent reported for December 2022.

Mr. Byles said that while January’s outturn represented the ninth consecutive month that inflation had declined below the 11.8 per cent peak in April 2022, it remains above the BOJ’s target range of four to six per cent.

Consequently, he said that the Bank sold approximately US$732 million via the BOJ Foreign Exchange Intervention Tool (B-FXITT) facility over the 12 months to February 16, 2023, and a further US$583 million to selected public entities, including State oil refinery – Petrojam.

Mr. Byles assured that the BOJ remains committed to its primary mandate of achieving price stability.

He maintained that “we will not waver in the resolve to bring inflation back into the target four to six per cent corridor.”

“The Bank will continue to closely monitor the global and domestic environments for potential risks that could threaten Jamaica’s inflation target,” he added.

Meanwhile, the Governor said the financial system has remained stable despite the impact of fair value losses during 2022.

Fair value is the estimated price at which an asset is bought or sold when the buyer and seller freely agree on a price.

To determine the fair value of a product or financial investment, an individual or business may look at actual market transactions for similar assets, estimate the expected earnings of the asset, and determine the cost to replace same.

Mr. Byles further indicated that deposit-taking institutions (DTIs) remain “well capitalised, profitable and in compliance with prudent liquidity standards.”

“At the same time, the quality of the DTIs loans portfolio remained stable,” he said.