KINGSTON, Jamaica – The Bank of Jamaica (BOJ) has reported that the foreign exchange rate and market have remained relatively stable over the last two years reflecting, in part, the actions taken by the institution.

Addressing the Central Bank’s quarterly monetary policy media briefing at the BOJ Auditorium in downtown Kingston recently, Governor, Richard Byles, said the entity sold approximately US$585 million via its Bank of Jamaica Foreign Exchange Intervention Trading Tool (B-FXITT)) facility for the 2023 calendar year, to date, to prevent undue volatility in the foreign exchange market.

“When these sales are set against BOJ purchases, however, the result is that the Bank net purchased approximately US$761 million over the period,” he noted.

Byles further informed that as at August 16, Jamaica’s gross international reserves remained substantial at approximately US$4.6 billion, which exceeded the standard measure of adequacy by approximately 15 per cent.

He said the bank projects that the reserves will remain adequate over the medium term.

Byles noted that one of the outcomes of the bank’s management of the FX market is that it has served to anchor inflation expectations.

He informed that in the BOJ’s latest survey of inflation expectations, less than 14 per cent of the respondents indicated that strong depreciation in the exchange rate was the most important factor behind their views of future inflation.

“The most frequently cited factor was changes in the prices of imported commodities, such as grains and oil. The last time the exchange rate was the dominant reason was February 2021, at which time 41 per cent of the businesses surveyed reported the exchange rate as the most important factor guiding their inflation expectations,” he said.

Meanwhile, Byles said Jamaica’s economy continues to expand, which supports increases in aggregate demand for goods and services and can potentially drive inflation upwards.

The Planning Institute of Jamaica (PIOJ) has estimated that the economy grew by 1.5 per cent for the June 2023 quarter, and that there are signs of continued expansion for the September 2023 quarter.

Data from the Statistical Institute of Jamaica (STATIN) indicate that the country’s unemployment rate at April 2023 was 4.5 per cent, the lowest on record.

Byles described the information as a momentous achievement for the Jamaican economy.

“Data on the unemployment rate, supported by anecdotal information about wage adjustments in selected private-sector industries, indicates that the domestic labour market is very tight.

From the bank’s perspective, this could become a threat to inflation if labour shortages translate into large wage increases and higher prices,” the governor said.

He pointed out that the bank continues to project growth ranging between one and three per cent for fiscal year 2023/24, largely the result of expansion in the mining sector as well as continued growth in tourism and its allied industries.

“Over the medium term, the economy is projected to settle at its long-run growth rate of one to two per cent,” he said.

-JIS