No Shortfall in Supply of Foreign Exchange – BOJ

Bank of Jamaica (BOJ) Governor, Brian Wynter, says recent fluctuations in the exchange rate have resulted from greater demand for foreign currency and not a shortfall in supply.

Noting that the exchange rate appreciated by 3.8 per cent during the October to December 2017 quarter, Mr. Wynter said this trend continued into the first week of January 2018, adding that since then, the market entered a “new phase” with the resulting depreciation.

He was speaking at the Bank’s quarterly media briefing at the BOJ Auditorium, downtown Kingston, on February 21.

“We can confirm that it’s not a supply shortfall that’s happening. Dollars are flowing, if you look at the trading numbers… but there is a substantially higher demand that is creating this movement of the exchange rate,” the Governor said.

Mr. Wynter said consequent on this, the Bank took the decision over a week ago to release US$40 million into the market for sale in March through the BOJ Foreign Exchange Intervention and Trading Tool (BFXITT).

He continued that the further five per cent reduction in the BOJ’s foreign exchange surrender requirements on February 5 has also provided an additional US$30 million to the monthly currency flow available to authorised dealers and cambios for sale to their customers, following a similar move in October 2017.

Mr. Wynter expressed the hope that these interventions will spur a favourable and positive response from the market.

The Governor said the BOJ is “pretty confident” in the effectiveness of the BFXITT mechanism.

“Our goal is to create some assurance to people doing business in Jamaica, whether you are buying or selling, that market (sustainability) will always be there. We are interested in the flows in the market and making sure that they remain healthy, and we want to see them increase. We think they will when buyers and sellers develop more confidence in this (BFXITT) mechanism,” Mr. Wynter said.