BOJ intervened twice last week in Jamaica's FX marketThursday, December 02, 2021
BY DURRANT PATE
The Bank of Jamaica (BOJ) intervened twice in the foreign exchange (FX) market last week, injecting a total of US$50 million.
Despite the intervention, the Jamaican dollar depreciated marginally week over week by 0.03.
Consequently, at the end of the week, US$1 was sold for $156.91 on November 26, 2021. It closed Thursday's trading at $156.53.
Activities in the money market
Turning to the money market, there was no improvement in the Jamaican dollar market liquidity conditions, as market players are opting to lend for overnight to 30 days with some brokers offering as high as 4.50% to clients.
As at last week, a total of $82.70 billion is in the market, with the liquidity highly concentrated amongst Deposit Taking Institutions (DTIs). Despite high BOJ rates, the average yield of the BOJ's competitive auction on its 30-day certificates of deposits (CDs) fell to 4.11 per cent from 4.34 per cent in the prior week.
This fall was due to increase demand for CDs. The highest bid for full allocation was 4.39 per cent.
A total of $9.50 billion was offered in the auction, while the total bids received was $18.90 billion. For the upcoming quarter, the US dollar money market will remain stable.
Broker market demand for US dollar remains at 30-days and longer-tenured funds with some brokers offering as high as 4.50% to clients. The BOJ will tomorrow auction some $11.5 billion worth of fixed rate 2.5 per cent CDs.
Some J$10.9 billion worth of the 30-day securities will be allocated on a competitive basis and J$575 million via a non-competitive route.