NCB sold US$874 million short

The US dollar peaked against the Jamaican currency in July as reflected in Bank of Nova Scotia selling the currency at the highest rate since June at an average of J$157.3698 on July 29 and Citibank selling at an average of US$157.8402. Last Friday, Bank of Nova Scotia sold the US dollar at an average of J$150.3714 and Citibank at $149.08. The indications are that these rates are likely to decline further, with more net selling by National Commercial Bank as the Jamaican dollar goes through one of its frequent yearly swings, in response to demand and supply of the US dollars.

NCB Financial Montego Bay branch

NCB sold off more than twice the amount of US dollars they purchased into the foreign exchange market, since the beginning of June this year up to Friday last week, with the bank selling US$1,298,524,926 or US$874,064,897 more than the US$424,460,029 purchased from the public. In 2020, NCB sold $900 million US dollars more than they purchased.
Data show that net purchases by NCB took place on only 3 days since the start of August. NCB net sales would include the sale of US dollars that emanated from the conversion of the surplus of other currencies into US dollars. The net position reflects a definitive selling short by NCB, with demand for US dollars waning one source informed ICInsider.com and the view that the situation won’t change before December when demand is expected to dip further and supplies increase.
In contrast to the actions of NCB, Bank of Nova Scotia the second largest foreign exchange trader bought US$511,485,130 and sold US$507,936,088 between the beginning of June and Last Friday, data from Bank of Jamaica shows.
Other developments in the foreign exchange market that could have a marked impact on liquidity are the continuing growth in remittance inflows in 2021 over the record 2020 flows. Bank of Jamaica draining of liquidity in the financial system has led to increasing interest rates on BOJ CDS from under one percent a few weeks ago to nearly two percent this week. Recovery in visitor arrival, with August arrivals approaching 80 percent of arrivals in 2019 and well over that of 2020. Increased exports earnings and of course increased imports cost.

Remittances slow from torrid pace

Jamaica’s remittances inflows slowed from the torrid pace experienced between May, last year to May this year, with an increase in June and July of 10 percent each over the record levels of 2020 with increases of 42 percent and 37 percent respectively in 2020 over 2019 and bringing the year to date growth to 30.4 percent, down from 42 percent to May this year.
According to a release from Jamaica’s Central Bank, June enjoyed inflows of US$303 million versus US$275 million last year and July US$324 million, up from US$293 million in 2020. For the year to July, the country has garnered US$2 billion up from US$1.56 billion for the same period in 2020. Remittances appear on track to hit US$3.5 billion by the end of the year if the recent trend continues which would be US$600 million than last year and US$1.1 billion over 2019.

The big winners from tourism rebound

Jamaica tourism arrival numbers are approaching 80 percent of the 2019 figures. That is good news for the country, workers in the industry, and businesses close to the hotel areas and has major implications for listed companies.  

Caribbean Producers back in TOP 10

Recent data of inward bound passengers through the country’s international airports suggest that tourist arrivals for 2021 will be robust and at levels that far surpass that of 2020. Not only will the numbers exceed that of 2020, but the most lucrative period of December to April when visitor arrival numbers are some of the best monthly patronages, but the rates paid to visit are at the highest for the year.
The rebound means more revenues for the government, more foreign exchange earnings for the country, more wages paid to workers and more income for persons and companies providing goods and services to the sector.
The big winners for listed companies are Caribbean Producers, a major supplier of goods to sector in Jamaica and St Lucia. Everything Fresh is also a significant supplier to the sector in Jamaica and should see a rise in sales, Express Catering generates all its income from the industry, with its locations within the Sangster International Airport and Dolphin Cove with its attractions being a big draw for tourists.

Dolphin Cove

Others to benefit to a lesser degree are GraceKennedy, Wisynco, Jamaica Broilers, Knutsford Express and Fontana, the latter, with stores in Ocho Rios and Montego that sell to the visitors.
The rebound has significant implications for the foreign exchange market in 2022. In 2019, the tourism sector earned around $3 billion and just $1 billion in 2020. A return to 2019 visitor arrival number should see another $2 billion gross generated by the country than for 2020 and 2021, along with the billion increase in remittances since 2019 if maintained into 2022, should result in one of the most buoyant foreign exchange environment for the county.

Tourist arrivals eyeing 80% of 2019 numbers

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Two and a half months after the end of June the Jamaica Tourist Board (JTB) is just reporting stopover arrivals for that month, that came in at 166,046 visitors, this compares with 160,000 this publication suggested in its July report.
By now the public ought to know how many visitors came into the country for July and possibly August. The long delay in reporting the data is unacceptable. The JTB needs to switch the manner of reporting by releasing the arrival numbers shortly after each month finishes and then release the full analysis at a later time.
At the same time, ICInsider.com had indicated that the numbers for July were set to end up around 170,000, but based on the outturn for June it is now likely to be 180,000 stopover arrivals or 67 percent of July 2019 arrivals, that saw 270,462 stopover arrivals. Arrivals for last year were just 41,941 in July and 43,813 in August shortly after the country reopened its borders. The latest available data suggest that August arrivals will be around 170,000 or 79 percent of the 214,780 stopover arrivals in 2019.
Tourism is one of Jamaica’s major earners and employers of labour.  A lot rides on the fortunes of this sector and Jamaicans need timely and up to date information for planning and decision making. It cannot be that the JTB sits on valuable information while the rest of the society has to wait at their pleasure to release the data.

Dominican Republic expects 4.8m tourists

Growth in tourism expected in 2021

The Dominican Republic will receive 4,840,376 tourists by the end of this year, just 75 percent of the 6,446,036 non-resident foreigners who arrived on the island in 2019, the country’s Minister of Tourism stated.
On Wednesday, September 8th, the Minister of Tourism David Collado said that between January and August 2021, 2.94 million tourists arrived in the country and the projected that, from October to December, “if everything continues normally within the pandemic,” a further 1.55 million visitors will arrive in the Dominican Republic.
“We are going to end the year at 4,840,376 non-resident arrivals, which is a number that we could never imagine we would be able to have in 2021. We are giving clear signals that tourism is recovering in a sustainable way in the Dominican Republic.” Tourism Analytics reported the information.

Remittance boom continues for Jamaica

Jamaica continues to benefit from a big surge in remittance inflows that started in May last year and is continuing with a big 28.7 percent jump to US$309 million in May this year, from $240 million in May last year.

This year’s performance is important as it was in May 2020 that the big upsurge in inflows commenced, with May 2020 inflows rising by 15.7 percent over 2019 inflows, bettering the decline recorded in March and April last year to the same months in 2019. For the year to date, total remittance inflows are up an incredible 42 percent over 2020 to reach US$1.4 billion for the five months period from US$987 million in 2020.
With the final seven months of 2020 generating inflows of $1.9 billion, total inflows for the current year should exceed US$3.4 billion and is likely to move closer to $3.9 billion based on the outturn for June this year over 2020.
Persons and businesses interested in foreign exchange developments for Jamaica should pay keen interest in what is happening in this market segment. If the remittances this year hold in 2022, with the rebound in stopover visitor arrivals set to return to normal levels in that year as well, would Jamaica be in a comfortable position for the central bank to build up reserves handily and it could also lead to some revaluation to the local currency.

Bank of Jamaica signaling tighter Monetary Policy

Bank of Jamaica (BOJ) announces its decision to hold the policy interest rate unchanged at 0.50 percent per annum. The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (the MPC Committee) in September and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
The BOJ went on to state, “While the Bank does not target any specific level of the exchange rate, Bank of Jamaica will also seek to ensure that movements in the exchange rate do not threaten the inflation target.”
Monetary policy decisions taken by Bank of Jamaica are aimed at ensuring that the annual increase in the prices of consumer goods and services (i.e. inflation) remains within the Bank’s inflation target of 4 percent to 6 percent.
These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year, starting the September 2021 quarter, inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. “Conditional on the gradual tightening of monetary accommodation, inflation is projected to remain at 5 percent over the medium term, ” the BOJ stated.

Jamaica’s tourist arrivals set for 170K in July

Tourism is Jamaica.

Tourist arrivals for July climbed just over 8 percent above arrivals in June this year, data out of the Sangster International Airport show, with 154,620 passengers arriving up from 142,727 in June.
Arrivals numbers are up nearly 400 percent above the 31,000 that came in July 2020, the second month of the country re-opening its borders to overseas’ visitors. Jamaica Tourist Board data show stopover arrivals in May 2021 at 122,522 compared to the airport arrivals through Montego Bay of 108,320. That means that Kingston accounted for around 24,000 visitor arrivals. Based on the above numbers, July should end up at 170,000 stopover arrivals and June is likely to end up around 160,000, as the country continues to record increasing numbers of guests following the dislocation last year.

GDP growth underestimated by Jamaica government

The economy’s recovery was highly underestimated by GOJ, with taxes on imports rising 22 percent faster than original estimates; nowhere was the forecast understated than in the tourism sector that has thrown up revenues over 100 percent in the first three months of the current fiscal year.

Faster tourism recovery in 2021 than expected

Up to June data on revenues collected shows that the sector is bouncing back by more than twice what was estimated with Travel Tax the best indicator as to visitor arrivals jumping 137 percent above estimate and accommodation Tax rising 90 percent above forecast to $367 million from a forecast of $194 million. The absolute numbers may not be meaningful in the overall fiscal income, but the percentage change tells a significant recovery story.
Travel Tax was projected to bring in $1.22 billion, actual collection ballooned to $2.9 billion in the three months to June this year, up 137 percent over forecast and is 175 percent higher than the inflows for the three months to June Last year, when just over $1.14 billion was collected with $1.6 collected in April. Elsewhere GCT on imported items surged 27 percent, resulting in $4.9 billion being collected above the forecast of $18.2 billion.
Total tax revenues are up 22 percent ahead of the $107 billion collected to June last year, with GCT on local goods and services up 16 percent and contractors levy up 38 percent, which is in line with increased cement sales for the quarter over that of 2020.
The implications of the sharp increase in the above revenue segment are that the economy is growing faster than the government agencies forecasted for the current fiscal year and, in particular, the extent of the recovery in the tourism sector.

GOJ revenues well ahead of budget

Revenue and grants for the government of Jamaica climbed 7 percent ahead of forecast with an increase of $11.6 billion over the budget of $163.8 billion to end at $175.4 billion for the three months to June this year. Expenditure, on the other hand, fell 4.6 percent or $7.6 billion to $165.7 billion.

Image courtesy of cooldesign/FreeDigitalPhotos.net

Tax revenues brought in $12 billion more than forecast and recurrent expenditure accounted for $7.6 billion of the underspending. Capital Spend was marginally more than the $18 billion budgeted.
Non-Tax revenues amount to $42.8 billion, with $34.5 billion collected in April and would have included the dividend from the Bank of Jamaica.
The government operation ended with a $5 million surplus in June and ended the three month period with a deficit of $1.7 billion, $22.4 billion better than forecast.
International Trade brought in 22 percent more revenues than the budgeted amount for the three months period, with a collection of $47.8 billion versus a forecast of $39 billion. Production and consumption taxes contributed $3.4 billion more to the revenue intake than planned, with an intake of $47.7 billion versus $44.3 budgeted.