The gross reserves at the Bank of Jamaica (BoJ), at the end of March 2012, amounted to just over US$2.6 billion, representing some 17 weeks of projected goods and services imports.
This was stated by Governor of the Bank of Jamaica, Brian Wynter, during his presentation of the Bank’s Monetary Policy Report for the January to March 2012 quarter.
The Central Bank Governor said that there were intermittent periods of excess demand for foreign currency during the quarter, “in spite of the adequacy of net private capital flows to finance the demand for current account transactions."
“To augment supplies in the market, the Bank sold US$102.1 million net, which contributed to a decline of US$189.0 million in the net international reserves (NIR) to US$1,777.1 million by the end of March. Partly as a result of these sales, the bank’s gross reserves at the end of March 2012 amounted to US$2,638.9 million, representing 17 weeks of projected goods and services imports,” he noted.
Mr. Wynter further stated that during the review quarter, there were also concerns about the volatility of international commodity prices, particularly that of crude oil. He explained that it was against the background of the uncertainties that the bank maintained its monetary policy rate at 6.25 per cent for the March quarter.
With respect to the broader picture, Mr. Wynter informed that the performance of the main macro-economic indicators was largely favourable in the March 2012 quarter.
“Inflation was 1.7 per cent for the review quarter, within the bank’s forecast range, which contributed to inflation of 7.3 per cent for the fiscal year, also within the range expected for the year. The foreign exchange market was also relatively stable with the weighted average selling rate of the US Dollar vis-à-vis the Jamaica Dollar depreciating by 0.8 per cent for the quarter and 1.8 per cent for 2011/12 financial year,” he informed.
In addition, the estimates of the Bank suggest that “the nascent recovery in economic activity” continued in the review quarter and resulted in the expansion for the fiscal year being also within the forecast range of 1.0 per cent to 2.0 per cent, the Governor said.
“Of note, the up-tick in credit to the private sector which was observed in the December 2011 quarter continued into the March 2012 quarter. The increased demand for private sector loans could be reflective of the continued decline in commercial bank loan rates as depicted in the fall of 35 basis points in the weighted average rate of interest on private sector credit,” he stated.
The Governor also cited the marginal improvement in the quality of private sector credit with the ratio of non-performing loans, three-months and over, declining to 8.4 per cent at end-March 2012, from 8.8 per cent at end-December 2011.
In addition, during the March 2012 quarter, market-determined interest rates remained broadly stable in the regular auctions of 30, 90 and 180-day Government of Jamaica (GOJ) Treasury Bills.
As examples of the stability, the Central Bank Governor stated that the average yield on the 180-day Treasury Bill was 6.47 per cent at the March auction, compared to 6.46 per cent at the auction last December.
By Allan Brooks, JIS Senior Reporter