Central bank pumps more money into FX market

Central bank pumps more money into FX market

Thursday, November 14, 2019

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The central bank yesterday intervened in the foreign exchange market for the second-consecutive day, by offering an additional US$30 million for sale to authorised dealers and large cambios.

The offer, which was provided through the Bank of Jamaica Foreign Exchange Intervention and Trading Tool, follows Tuesday's intervention of US$40 million.

That provision, which was sold at a weighted average rate of $142.38, was in response to recent fluctuations in the value of the Jamaica dollar against the US dollar, and public concern about the depreciation in the exchange rate.

In a statement on Tuesday, the Bank of Jamaica (BOJ) attributed fluctuations in the exchange rate to increased demand for foreign currency, “due to regular restocking by retailers for Christmas”.

Additionally, the central bank said there has been “extraordinary demand” relating to portfolio transactions.

“Notwithstanding the recent depreciation, inflows into the foreign exchange market remained healthy. For October 2019, average daily inflow from earners was approximately US$31 million, in line with October 2018,” the BOJ said.

It noted, however, that demand has outstripped this supply due to the aforementioned factors, adding that “the bank does not expect that the recent pace of exchange rate movement will be sustained”.

The central bank further emphasised in a statement yesterday that “these interventions are intended to address temporary demand and supply imbalances in the market”.

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