Bank of Jamaica (BoJ) Governor, Brian Wynter, is reporting a US$113 million increase in the country’s Net International Reserves (NIR).
The figure is US$997.3 million as at May 10, compared to US$884.3 million at the end of March.
Mr. Wynter attributed the improvement to “substantial” purchases of foreign exchange from the market by the BoJ, as well as the initial disbursement of US$207.2 million to Jamaica by the International Monetary Fund (IMF), under the recently concluded four-year Extended Fund Facility (EFF).
The BoJ Governor, who was addressing the Central Bank’s quarterly briefing at its downtown Kingston offices on Wednesday, May 15, informed that the NIR declined by US$241.3 million at the end of the January to March quarter, consequent on several factors.
These, he explained, included growing uncertainty about the timing and content of the pending EFF and anxieties about the administration’s ability to finance debt payments that were due in February.
“These concerns were reflected in a sharp decline in net private capital flows to the economy for the quarter…(and)..increased…depreciation in the (value of the Jamaica dollar against the US dollar),” the Governor pointed out.
At the same time, there was continued decline in foreign exchange net demand for external trade in goods and services.
“This decline was largely related to estimated reductions in payments for consumer goods and raw materials,” Mr. Wynter said.
The Governor said consequent on the IMF disbursement and the BoJ’s purchases, the uncertainties in the foreign exchange market during the January to March quarter “have now waned”.
He contended that these, along with market expectations of increased foreign currency inflows and the projected dividends on longer tenure instruments introduced in the market in April by the BoJ, have also resulted in an appreciation of the dollar since the middle of that month.
The one-year US dollar-indexed note and three variable rate instruments together, absorbed some $12 billion.
“The NIR is expected to continue to increase gradually over the (2013/14) fiscal year due to growth in multilateral inflows as well as incremental improvements in net private capital flows. The Bank of Jamaica remains committed to providing an orderly market for foreign exchange and will take the necessary actions to maintain order,” the Governor assured.
Mr. Wynter contended that “orderly” movements in the exchange rate, which enhance price competitiveness, will help to create an environment, which facilitates “strong and sustained” growth in exports and import substitution. These, he said, are “key objectives” of the Government’s medium-term macro-economic programme.
Contact: Douglas McIntosh