Friday 30 October, 2020

Jamaican dollar strengthens by more than $1 against US greenback

The Jamaica dollar switched from its weakest trading position in March towards its strongest within a day.

The movement was $1.32 or about one per cent in a trading day.

The dollar closed mid-week at $135.65 to US$1 compared to $136.97 on Tuesday.

Normally daily movement totals cents on the dollar and not the entire dollar and change.

The strengthening of the Jamaica dollar against the US dollar was not matched with other major trading partners. The Canadian dollar closed at $94.44 from $94.08 and the British pound closed at $162.30 from $159.89.

The Bank of Jamaica (BOJ) announced temporary measures to increase liquidity in the foreign exchange system last week.

The dollar traded at its strongest position on March 10 at $135.42 to US$1 with its weakest position on Tuesday.

The BOJ increased by five percentage points the limit on the foreign currency net open positions (FXNOP) of authorised dealers. It increased to +/-25 per cent from +/-20 per cent of regulatory capital denominated in Jamaica Dollars, effective March 19. This temporary increase will remain in effect until June 30. 

“The FXNOP limit was calibrated to ensure adequate levels of liquidity in the foreign currency market. Upon its introduction in 2018, Bank of Jamaica had committed to conducting a periodic review of the limit. The decision to temporarily increase the limit is based on the prevailing market conditions,” stated the BOJ.

 

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