Jamaica’s Central Bank head quarters Downtown Kingston
Foreign exchange dealers and cambio operators will surrender 5 percentage points less foreign exchange to Bank of Jamaica, (BOJ) effective 7 February. Jamaica’s central bank announced the reduction on Friday, the second time within three months.
The amount required to be sold to the central bank will be 20 percent by Authorised Dealers and 15 percent for cambios of daily purchases.
According to BOJ, “the continued reduction in surrender requirements, in conjunction BOJ Foreign Exchange Intervention and Trading Tool (B‐FXITT)with the , is in keeping with BOJ’s ongoing reform programme to make its interaction with the foreign exchange market more transparent and to improve the efficiency and transparency of the FX market in general. The central bank expects this reduction in surrender requirements to improve liquidity conditions in the FX market and contribute to its deepening. Going forward, the central bank will conduct periodic reviews of market conditions and other factors to determine the scope for further reductions in the surrender requirements, concurrently with further enhancements to B‐FXITT.”
In October, Bank of Jamaica stated that the present arrangement requiring foreign exchange dealers to surrender around 25 percent to 30 percent of their daily intake is to be phased out. The central bank now considered that the market is deep and liquid enough for government entities to go directly into the market for their needs. After that announcement the central bank followed up with a 5 percentage points cut in the amount to be surrendered in October.
In other developments within the FX market the central bank notified the market that they do not intend to have any auction of foreign exchange for the period ending February 13. The last B‐FXITT auction was on Wednesday, 29 November 2017 for the sale of US$4 million. Since then the central bank bought foreign currency from the market.
