Saturday 24 August, 2019

BOJ sells US$30 million to dealers in latest FX market intervention

Three weeks after it last did so, the Bank of Jamaica on Wednesday again intervened in the foreign exchange market.

This time the central bank sold US$30 million at a weighted average rate of $137.48 to authorized dealers and large cambios by means of its Foreign Exchange Intervention and Trading Tool (B-FXITT).

“This intervention is intended to address temporary demand and supply imbalances in the market,” the BOJ said in a statement.

It has also sought to encourage businesses to utilise forward contracts with their financial institutions to minimize the risks associated with their foreign exchange obligations.

“This is particularly relevant in an environment in which two-way movements of the exchange rate occur,” said the BOJ.

When it last intervened in the market last month, the BOJ sold some US$40 million to authorised dealers and cambios.

At that time of that intervention, the Jamaican dollar had suffered a sharp decline in value against its United States counterpart. It also came amidst calls by the President of the Private Sector Organisation of Jamaica Howard Mitchell, for the Jamaican dollar to be pegged against its United States counterpart.

That call has since been abandoned.

Last month the Opposition Spokesman on Finance, Mark Golding accused the Government of “allowing the Jamaican dollar to bounce around like a jack-in-the-box.”

“It is damaging credit arrangements with suppliers, creating great uncertainty, and playing havoc on businesses,” Golding said in a statement.

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