Business

BOJ introduces mid-day FX trading rate

Saturday, September 23, 2017

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The Bank of Jamaica (BOJ) on Thursday said it will, starting next Monday, begin publishing mid-day rates for the four major currencies traded in the local market.

The bank said the rates for the US and Canadian dollars, British Pound, and the Euro will be published on its website at 1:00 pm each day in keeping with a promise made earlier this year.

“This rate publication will reflect all foreign currency market transactions reported up to 12:30 pm each business day. It will be in addition to the existing comprehensive foreign exchange report encompassing overall market activity which BOJ now publishes at the end of each working day,” the bank said in a news release.

“The mid-day rate will immediately impact the way the central bank buys foreign exchange from the market. Bank of Jamaica currently buys a percentage of the daily foreign exchange purchases of all authorised dealers and cambios (excluding inter-dealer trades) in what is called a surrender arrangement, and these transactions are now settled at the previous day's weighted average exchange rate,” the bank added.

It said that as of September 25, 2017, the settlement rate for these surrenders will be the new mid-day rate. “Since conditions can change from day to day, using a same-day rate will automatically make these transactions a better reflection of market conditions in real time, and thus more accurate and transparent,” the bank added.

The central bank said that the move is in keeping with its ongoing efforts to modernise Jamaica's foreign exchange market, especially from the standpoint of how the bank interacts with it, as well as encouraging authorised dealers and cambios to trade more among themselves.

“In addition to boosting the efficiency of the market, these modernisations also intend to increase transparency, so that in addition to the market working better to suit all participants, published rates and trends are, at any given time, a more accurate reflection of actual market conditions,” the BOJ said.

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