Governor of Jamaica’s central bank, Brian Wynter
After introducing B-Fxitt in July last year, an auction system that offers US dollars for sale to authorized dealers by Bank of Jamaica that helped to smooth out flows in the market. The central bank will for the first time be buying funds from the market this week.
The first such auction will be on Wednesday this week, in which they are offering to buy US$5 million. The following week, the central bank of offering to purchase US$12 million and US$15 million the week following.
For a market that many Jamaicans view suspiciously any change or introduction of something new is often greeted with cynicism and viewed as a political tool to stave off public outcry about devaluation. Jamaicans have seen and felt the full impact of devaluation of the local currency in the driving up of prices and making it difficult for them to meet their needs. Changes that make it appear that the system is being manipulated to make believe things are better than they are, are viewed suspiciously. Devaluation is seen as a tool that favours the moneyed class and against the masses. The truth is that the country has never been adequately informed on the reasons and requirements for keeping the currency relatively stable, even as it is subject to market forces.
The rate of exchange between the Jamaican$ & the US$. The rate has fallen below the 120 moving average again.
Last year, the local dollar lost value in which it required more than 131 Jamaican dollars to buy one US dollar. The B-Fxitt auction system made funds available to the market based on an announcement of amounts to be auctioned over a four weeks’ period. The local dollar started to appreciate some times after the introduction of the new system until the end of the year, even as Bank of Jamaica stopped selling at the end of November. Having reached J$125 to the US dollar by the end of 2017, buying pressure saw it rising to more than $128 in March. After BOJ had two auctions in the month amounting to US$40 million in total, the rate has fallen back to just over J$125 to the US dollar, last week.
“We decide on the amounts to be auctioned based on market intelligence. This is based on information as to supply and demand provided by dealers and their clients. The central bank analyses the data to assess liquidity in the system,” the governor of the Central bank stated in a briefing on Friday explained how they determine the amounts to be auctioned. The governor further stated that the “feedback provided a loop of information for both the BOJ and dealers” in assessing demand and supply.
Jamaica’s Central Bank is offering to buy US$5M in its weekly FX auction during the week.
“The country had better start getting used to the two way movement that we have seen since last year,” Wynter states. For him the, strong fiscal performance and the government’s commitment to maintaining it is critical to maintaining the balance. Added to that is the increased confidence within the wider society about the economy. The two way movement within a short time frame must be causing sleepless time for people holding US dollars as they are unsure what the rate will be from time to time. Wynter is of the view that the changes make by the central bank are already reducing the dollarization in the system. The governor sees more of that taking place going forward as investors look locally to other better paying investments options.
There will be more reduction in the surrender requirements of the central bank. The bank cut 10 percentage points between late last year and this year. Wynter indicates that another reduction is coming in the current quarter and ultimately there will be no more surrender requirements with BOJ using their auction system to buy and sell in the future. The change here makes more funds available in the foreign exchange market.
Going forward, the market will be deeper, provide more choices and greater liquidity Wynter stated.
The Jamaican dollar has been trading within a band of J$125 to 130 to the US dollar, a situation Wynter sees as likely to be the norm for sometime to come. Wynter who was speaking at special briefing on Friday, indicated that Jamaicans had better start getting used to this new development as there is enough foreign currency available in the system. A development which he things the new foreign exchange auction B-Fxitt, that the central bank manages has helped to foster with much more transparency in the market aided by market intelligence by both buyers and sellers as well as the central bank. But the new B-Fxitt is not the only factor at play. Not only that, according to the governor even as the bank cut the compulsory take form dealers by 10 percentage points, BOJ has not suffered lower intake as a result of increased flows, some of which Wynter attributes to the selling of US dollars by locals to go into more profitable form of local investments. Government’s tight fiscal discipline has gone a long way to creating and environment of stability within the economy and among the business sector.
So where is the stock market in all of this? The junior market is up 8 percent year to date, but main market stocks have just crawled a mere 3 percent, the latter wont being performing so poorly much longer. This short term chart shows two channels that the market is trading within. The market is trading closer to the upper resistance line shown in red. The lower blue line has been steering the market slightly side wards with an upward bias. A very important feature, which is not shown in the attached chart, is an extremely bullish formation shown on a longer term chart. That chart shows the market now caught up in a wedge formation with the top being around 335,000 points using the all Jamaica Composite index. With the recent market moves, it appears that the wedge is going to give way and herald a huge rise upwards in the market and that in going to happen within a few weeks, probably after first quarter results are released starting in late April.
Trading on the Jamaica Stock Exchange main market ended at a another record close, with JSE All Jamaican Composite Index increasing by 763.78 points in a record closing high of 326,087.70 and the JSE Index gaining 695.89 points to a record closing high of 297,102.76. 
Trading resulted in an average of 190,234 shares valued at $4,596,711, for each security traded, compared to 419,737 shares valued at $15,695,578 on Thursday. The average for the month to date is 1,240,308 shares with a value of $6,425,698 and previously 1,510,327 shares with a value of $7,058,809. In contrast, March closed with an average of 626,526 units with an average value at $20,492,207 for each security traded.
Trading levels dipped sharply lower on Friday, compared to Thursday with a volume of 5,136,325 units valued at $124,111,209, down from the 11,332,892 units traded for $423,780,603 on the main market of the Jamaica Stock Exchange. 
The US dollar market closed on Thursday with 11,628 units valued at US$2,565 as Margaritaville traded 237 units to gain 5 US cents to 25 US cents and 
Grace Kennedy traded 7.8 million shares for $380 million accounting for 69 percent of the overall market volume of 11,332,892 units for $423,780,603 on the main market of the Jamaica Stock Exchange on Thursday. 
Radio Jamaica settled 1 cent higher at $1.05, with 92,144 shares, 
The Junior Market slipped 8.33 points to close at 2,958.45 on Thursday as declining stocks beat advancing almost by a 2 to 1 ratio as the number of companies trading fell from Wednesday’s level. 
Market activity ended with an average of 154,530 units for an average of $585,364 compared to an average of 77,246 units for an average of $312,402 on Wednesday. The average volume and value for the month to date, amounts to 246,012 units at $1,064,766 compared to 283,041 units at $1,258,810 on the prior trading day. March closed with an average of 149,999 units valued at $623,819, for each security traded.
Eppley ended trading 13,000 shares and rose 10 cents to $9.60, Express Catering lost 10 cents at $5.25, with 291,235 shares trading, General Accident closed with a loss of 5 cents at $2.95, exchanging 22,000 stock units, GWest Corporation ended with a loss of 1 cent at $3.09, exchanging 35,475 units. Honey Bun concluded trading after falling 5 cents to $4.65, with 6,000 shares, Jamaican Teas ended trading at $5.30, with 25,000 stock units, Jetcon Corporation traded 10 cents higher at $4.15, with 81,862 units, Key Insurance finished trading with a loss of 65 cents at $4, after 501,651 shares changed hands. Lasco Distributors lost 5 cents to end at $4, with 853,641 stock units, Lasco Financial finished 70 cents higher at $5.70, with 24,256 units, Lasco Manufacturing settled with a loss of 1 cent at $3.99, with 52,230 shares and Medical Disposables traded at $5, with just 400 shares changing hands.
Jamaica Stock Exchange main market stocks had a light on Wednesday with trading of just 2,989,332 units, valued at a mere $34,924,721 as 24 securities changed hands, with 12 rising, 7 falling and 6 trading firm. 
with 180,332 shares changing hands, 
The Jamaica Stock Exchange main market enjoyed gains for most of the trading session on Wednesday, but pulled back later in the day, to record losses at the close with only 25 securities traded versus 29 on Tuesday. 
The Junior Market gained 10.84 points to close at 2,966.78 on Wednesday, as advancing stocks were just edged out by declining ones. 
March closed with an average of 149,999 units valued at $623,819, for each security traded.
