In Tuesday’s forex trading, buying and selling volumes were more closely matched with funds bought by dealers being slightly above the amounts sold. Dealers bought just over US$13 million in all currencies than they sold.
On Tuesday, dealers bought the equivalent of $25,710,419 versus US$47,763,088 on Monday and sold the equivalent of US$24,985,551 compared to US$34,622,132 on Monday.
In US dollar trading, dealers bought US$23,198,261compared to US$42,021,074 on Monday as the buying rate for the US dollar, slipped 6 cents to $112.08 and sold US$22,007,235 versus US$31,275,581 on Monday, as the rate eased 7 cents to $112.63.
The Canadian dollar buying rate rose 13 cents, to $102.93 with dealers buying C$852,194 and selling C$750,104 as the rate fell 9 cents, to $105.21.
The Pound closed at $189.29, for the purchase of £962,129 down 93 cents, while only £896,565 was sold, with the rate climbing by 40 cents, to $192.68. Other currencies bought, amounted to the equivalent of US$104,562 while selling was the equivalent of US$992,469.
Highs & Lows| All the highs and lows at the end of trading that moved declined. The highest rate for buying the US dollar, closed with a loss of 10 cents at $113.10, the lowest buying rate and the highest selling rate remained unchanged at $91.85 and $117.70 respectively, while the lowest selling rate dropped back by 16 cents cents to $91.85.
The highest buying rate for the Canadian dollar declined by 30 cents, to $105.05 and the lowest buying rate and the highest selling rate and the lowest selling rate were unchanged at $83.21, $107.21 and $100.25 respectively.The highest buying rate for the British Pound, fell 30 cents to $193.30, while the lowest buying and selling rates were unchanged at $153.88 and $185.40 respectively, the highest selling rate fell $3.36 to $195.66.
Jamaican dollar gains versus US & Canadian
Phillips & Wynter kill inflation in Jamaica
Many Jamaicans may be feeling the negative effect of the economic pressures the country is undergoing. One area in which it is seen, is the official data on inflation as the overall measure of consumer price movements, went virtually nowhere, in June.
Inflation in Jamaica is set to hit the lowest level, in years if the trend for the first six months of the year continues. According to data put out by the Statistical Institute of Jamaica, the inflation rate for June is 0.1 percent, when compared to the index for May 2014. This is 0.9 percentage points lower, than the 1.0 percent recorded for May this year. The lower movement was mainly due, to a decline in the cost of electricity which resulted in the index for the group ‘Electricity, Gas and Other Fuels’ moving down by 4.2 percent. This fall was tempered by an increase of 3.6 percent, due to an increase in the cost of water. Food and Non-Alcoholic Beverages rose by 0.6 percent. Upward movement in the prices of ‘Meat, ‘Milk, Cheese and Eggs’ and ‘Bread and Cereals’ were the chief contributors.
The movement in the index for June 2014 resulted in a calendar year- to-date inflation rate of 2.5 percent.
Mean quarterly inflation rate for the second quarter of 2014 was 1.1 percent, 0.3 percentage points lower than the first quarter which had an inflation rate of 1.4 percent.
Jamaica remittances grow but lag region
Remittances into Jamaica continue to grow as the international economy continues to recover from the depression suffered since 2008. Jamaica’s increase of 4.4 percent for the first three months of 2014, is one of the lowest in the region of countries with large remittance inflows. Mexico is up 13 percent, El Salvador 8 percent and Guatemala 9 percent. Most likely, exchange instability affected Jamaica’s numbers negatively.
Net remittances, increased by US$11 million to US$172 million for March 2014, or 6.7 percent over March last year. Gross inflows were US$188 million, an increase of US$9 million. Net remittances for the three months to March amounted to US$461 million, an increase of US$30 million or 6.9 percent. For the three months, total remittance inflows were US$514 million, an increase of US$22 million or 4.4 percent.
Inflows were higher in each of the three months for the year, so far. Total remittance outflows declined in the quarter versus 2013, from US$61 down to US$53. The USA accounted for 61 percent of inflows and the UK 16 percent, in the quarter.
Big improvement in balance of payments
There is a major improvement in Jamaica’s Current Account deficit for the March 2014 quarter, according to a report out of Bank of Jamaica. Lower imports partially offset by lower exports and improved service inflows led to an improvement of US$301 million the deficit of US$401 million in the March 2013 quarter, resulting in a deficit of US$101 million.
“The outturn for the 2014 first quarter is the second lowest current account deficit recorded since 2007” the country’s central bank states. The improvement in the Goods Account was due to a significant decline in imports which was partially offset by decline in exports. The decline in Imports of US$281 million was primarily driven by a US$172 million and a US$133 million decline in chemicals and mineral fuels imports, respectively. The decrease in exports was primarily attributable to a US$86 million and a US$31 million decrease in chemical and crude material exports, respectively, partially offset by an increase in the exports of manufactured goods of US$21 million.
An increase of US$31 million to US$270 million in the balance on the Services sub-account resulted primarily from improvements in transportation and travel services of US$33 million and US$18 million, respectively. The improvement in transportation resulted from reduced freight costs associated with the reduced imports, while the increases in travel receipts occurred due to a 3.3 in visitor arrivals.
Businesses more optimistic
Perception of in the most recent survey done in May of this year showed improvement in present business conditions by the business sector, compared to the previous survey done in April. The Bank of Jamaica commissioned survey, shows the index moving from 95.8 in April to 102.5 in May. The results are well off the 158 achieved in December 2011 or 135 reached in March 2013.
Expectations about future business conditions, however, were largely unchanged. Of note, both indices remained below the levels recorded in Fiscal year 2011/12, nonetheless, the perceptions of present and future business conditions have displayed a general upward trend since the April 2013 survey.
Statin confirms 1.6% growth in Q1
The Jamaican economy grew by 1.6 percent in the first quarter of this year over the similar 2013 period but it is lower than the growth in the December quarter and only just moves the country ahead of where it was in 2012 as the latest growth figure places the country at 0.50 percent ahead of the first quarter of 2012. This is the third straight quarter that the economy is said to have grown. Statin previously confirmed that the Jamaican economy grew 1.8 percent in last year’s fourth quarter, 0.5 percent in the third quarter of 2013 when compared to the similar quarter of 2012 versus a decline of 0.1 per cent in the second quarter and declined by 1.3 per cent in the first quarter of 2013.
In contributing the overall growth in 2014, Goods producing industries grew by 5.5 percent and Services industries by 0.3 percent. Agriculture, Forestry & Fishing grew by 17.7 percent, Mining & Quarrying 8.5 percent and Construction 1.2 percent. Manufacture declined by 1.2 percent.
“Higher output levels in Construction was impacted largely by continued expansion in hotels and increased spending on work under the Jamaica Development Infrastructure programme”, Statin stated.
“Higher output was recorded for all industries within the Service sector with the exception of the Government Services which declined by 0.2 percent. Higher output was recorded for Transport, Storage & Communication (0.7 percent), Real Estate, Renting and Business Activities (0.6 percent), Electricity & Water Supply (0.5 percent), Other Services (0.4 percent), Hotels & Restaurants and Finance & Insurance Services (0.2 percent) and Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment grew by (0.1 percent)”, the report stated.
Huge change in Jamaica’s CARICOM non-fuel trade
While imports from CARICOM for the first quarter of 2014 rose over the similar period in 2013, the figures mask the huge progress Jamaica made in in the non-fuel trade balance with Caricom partners. The value of nonfuel imports from CARICOM fell in the first three months of 2014 while exports jumped, albeit from a low level. Imports fell to US$64 million from US$73 million in the comparable 2013 period and exports jumped 63 percent or $11 million to US$29 million, a $20 million improvement in the trade balance excluding fuel. Manufactured Goods valued at US$13.6 million was the major contributor to this increase in exports. Food valued at US$7.6 million, Beverages & Tobacco at US$2.2 million and Miscellaneous Manufactured Articles at US$1.8 million constituted the major commodity groups exported to CARICOM, the report from the Statistical institute of Jamaica stated.
Notwithstanding the improvement in the non-fuel imports, total mported items from Caricom rose to US$207 million for the quarter, US$44 million more than the US$163 million recorded for 2013.
Imports of Mineral Fuels, increased during the current 2014 period to US$143 million increasing by US$53 million moving from US$90 million.
Wipe out of Ja fiscal deficit seems likely
With two months out of the 2014/15 fiscal year reported on, the Peter Phillips led Ministry of Finance seems set to again report a wipe out of the fiscal deficit at the end of the fiscal year that ends in March 2015. The budget had suggested a deficit of just over $11 billion. So far there is a $5 billion improvement in the deficit to May with a $2.1 billion improvement in revenues and a $2.9 billion cut in expenditure with capital expenditure accounting for $1.5 billion of the expenditure reduction,but it would be the buoyancy of the revenues that would have been pleasing to the Minister. The country in the past has seen impressive performances in the early months of the financial year only to be face with cuts in expenditure later, as revenues failed to meet the targets set. It will not be clear if the current revenue trend continues, the next few months to come will paint a clearer picture of the likely outturn.
Total revenues which were projected at $52 billion ended at $54 billion and expenditure of $69.6 billion came in at $66.7 billion instead. $752 million less was spent on the wage bill and $676 on programs. Tax revenues brought in $1.87 billion more than projected. The deficit ended at $12.6 billion versus $17.6 billion projected.
Imports drop, exports drop
Devaluation of the local currency since the start of 2013 that should be helping move exports upwards had no visible impact on overall exports of goods in the first quarter of this year compared with 2013, it however, could be impacting imports somewhat as imports have fallen partially as a result. Jamaica imported US$1.412 billion </a>of goods down from US$1.647 billion imported in the January to March quarter last year, representing a reduction of US$235 million or 14.3 percent.
Exports on the other hand came in at US$358 million, down from US$469 million in the 2013 quarter. The decrease in exports was US$111 million or 23.6 percent and is due mainly to a fall in Alumina exports which fell from US$236 million in the comparable 2013 period to US$105 million this year. The merchandise trade deficit for the quarter ended at US$1.054 billion compared to US$1.178 billion in the similar quarter of 2013. The information was released by the Statistical Institute of Jamaica today.
Imports| Non-fuel imports during March 2014 quarter declined by US$176 million or 16 percent versus 2013 ending at US$907 million, down from US1.08 billion in the 2013 period. Mineral Fuels, declined by US$59 million or 10.5 percent. Imports of Raw Materials/Intermediate Goods decreased from US$1.11 billion in the 2013 review period to US$863 million in the 2014 review period.
Traditional exports fell by US$37 million to US$168 million in the 2014, down from US$205 million in the 2013 period, a decrease of or 18 percent of this Agricultural commodities fell by US$2.5 million or 35.0 percent and were valued at US$4.6 million. The decline in earnings from “Coffee” exports which fell to US$3 million was the main contributor to this decrease.
Mining and Quarrying was valued at US$135 million, a decrease of 20.1 percent, moving from US$169 million in the 2013 review period.. “Manufacture” recorded a 2 percent decline and was valued at US$28 million compared to the US$28.5 million recorded for the similar January to march 2013 period. Non-traditional domestic exports during January to March 2014 were valued at US$177 million.
T-bill rates drop sharply
The average rate for the 90 day Treasury bill instrument came out at 7.66 percent at today’s auction, down sharply from the May auction which came out at an average of 8.2 percent as Government sought to raise $400 million for this time frame but the auction saw $851 million chasing after the amount available. The 180 day instrument which averaged 8.932 percent in May plummeted to 8.365 percent as $877 million chased after the $400 million available.
Also on offer was a 30 day instrument to raise $400 million which provided an average rate of 6.797 percent as $534,303,700 chased after the $400 million that was available. The previous 30 day Treasury bill issued cleared at an average rate of 6.99 percent, in May this year.