Jamaicans - individuals and institutions - are saving at commercial banks at a much faster rate in hard currency than they are in local currency, data just released by the Bank of Jamaica show.

Between July 31, 2004 and the end of July this year, foreign currency account balances held at commercial banks jumped by 16.67 per cent, and for commercial bank, merchant banks and building societies, by 15.37 per cent.

In contrast, based on Business Observer calculations, savings in local currency accounts at commercial banks increased from $137.7 billion to $142.9 billion or by 3.7 per cent.

According to the BOJ, total deposits at commercial banks amounted to $216 billion at July 31, 2004. However, some US$1.28 billion or the equivalent of J$78.26 billion(using an exchange rate of US$1 - J$61 was held in hard currency.

For July 2005, of the $234.6 billion in total deposits, US$1.497 billion (or J$91.69 billion) was held in hard currency, with $J142.9 representing the portion held in local dollars.

The US$1.92 billion held in building societies, commercial, and merchant banks at the end of July was just slightly below the US$2.14 billion held by the Bank of Jamaica in its net international reserves.

The hard currency deposits at commercial banks was the fastest growing of the three institutions with the building societies balance growing by 11.4 per cent to US$274.3 million, and that of merchant banks by 10.68 per cent to US$145.75 million.

Importantly, the hard currency deposits have helped commercial banks to create a healthy portfolio of hard currency loans - with these loans growing faster than loans in Jamaican currency.

For the one year period, hard currency loan balance at commercial banks jumped by 27.64 per cent, from US$722.9 million, toUS$921.94 million.

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