BANK of Jamaica (BOJ) Governor Richard Byles is seeking to calm fears about the recent slide in the Jamaican dollar, highlighting that the depreciation so far this year is much slower than the comparative period last year.

Pointing out that as at February 16, the exchange rate was J$157.42 to US$1, Byles explained that this represents an annual point-to-point depreciation of 4.0 per cent.

Since the beginning of 2022, the exchange rate has depreciated by 1.5 per cent, which the BOJ governor trumpeted is significantly slower than the 6.1 per cent for the similar period in 2021. Addressing the bank's quarterly news briefing on Monday, the BOJ governor reported that, “the deceleration in the pace of depreciation versus last year reflects the actions taken by the bank in response to the higher than targeted inflation.“

He underscored that the BOJ has been active in the market to defend the currency, noting that “specifically, since the beginning of the year, the bank sold US$301.9 million to the market via B-FXITT, compared to US$88.7 million for the corresponding period of 2020. In addition, Bank of Jamaica sold US$115.3 million directly to the energy sector.”

Byles boasted that the actions taken by the BOJ have ensured that foreign currency (FX) flows continue to be healthy and that businesses and individuals in Jamaica requiring foreign exchange have been able to access it. For the calendar year to February 3, 2022, the daily purchases of US dollars by authorised dealers and cambios averaged approximately US$37.2 million, 12 per cent higher than the average of US$33.3 million recorded over the same period last year.

At the same time, the central bank governor outlined that daily sales to end users over the same period averaged close to US$30.5 million, 26 per cent above the US$24.2 million recorded a year earlier. As at February 16, Jamaica's gross international reserves were substantial, amounting to US$4.3 billion, and representing the equivalent of 140 per cent of the level considered adequate.

He stated that the BOJ's projection is for the gross foreign currency reserves to continue to remain healthy, arguing that this is supported by a current account deficit of the balance of payments ranging between 0.5 and 1.0 per cent of gross domestic product (GDP), a sustainable level by traditional measures..

Looking at the financial sector, Byles pointed out that the balance sheet of deposit-taking institutions remain robust, adequately capitalised and in compliance with prudent liquidity standards. The pace of loan growth, while remaining positive, he observed, has continued to slow due to the moderating impact of the pandemic.

The stock of private sector loans and advances recorded year-on-year growth of 7.9 per cent at November 2021, compared to growth of 16.5 per cent at February 2020 (prior to the crisis). At the same time, non-performing loans remain well below our threshold for concern and continue to be fully provided for by the system.

The BOJ governor reaffirmed the bank's commitment to fulfilling its mandate of price stability, promising that it will “aggressively pursue all options within its sphere of influence in an effort to ensure a return of inflation to the target range of four to six per cent. The bank will closely monitor the economic environment and stands ready to expand its suite of measures at subsequent policy meetings, if necessary, in order to achieve this objective”.