Rigged – Jamaica’s FX market

Rigged is the best way to describe the Jamaican foreign exchange market. How else can one describe a market where supply is much greater than demand, yet the price keeps rising. What is happening in the foreign exchange market defies logic, and the law of demand and supply.
Bank of Jamaica has a mandate to build up the Net International Reserves to an amount that is well in excess of the more than US$3 billion that it now holds. BOJ is not buying directly from the banks in the open market to add to the reserves other than the automatic surrender of 30-35 percent from gross inflows. From the start of July, to present, the net inflows into the banking system is in the order of US$470 million, with most being in United States dollars. In such a scenario one would expect at least stability in the rate of the Jamaican dollar versus the US dollar, with BOJ intervening to buy off the excess funds. On Tuesday, there was nearly US$15 million surplus into the system with the Jamaica dollar gaining moderately, on Wednesday the surplus of US dollar trading amounts to $9.5 million but the selling rate for the US dollar rose by 14 cents, despite the large net inflows.
Trading closed Wednesday with a surplus of US$11.5 million, as the Jamaican dollar lost ground against the United States dollar but gained against the others.
At the end of trading, the equivalent of all currencies bought by dealers amount US$44,113,891, while US$32,654,420 was sold compared to US$51,024,854 purchased and US$36,510,572 sold on Tuesday.
In US dollar trading, dealers bought US$39,723,979 compared to US$47,917,627 on Tuesday. The buying rate for the US dollar rose 7 cents to close at $127.72. A total of US$30,231,066 was sold versus US$34,533,467 on Tuesday, with the selling rate gaining 14 cents to end at $128.37. The Canadian dollar buying rate rose 77 cents to $96.17, with dealers buying C$1,581,148 and selling C$1,198,795 at an average rate that fell 3 cents to $97.84. The average rate for buying the British Pound rose 36 to $162.31 for the purchase of £2,358,729 while £976,119 was sold at a rate that dipped 49 cents to end at $164.02.
At the end of trading, dealers sold €148,438 as the selling rate for the Euro, closed at $144.43 for fall of $1.24 from Tuesday’s rate, according to data from Bank of Jamaica. Dealers purchased €91,063 of the European common currency at $139.08 after rising 53 cents from the rate on Tuesday. The US dollar equivalent of other currencies traded, amounts to US$102,475 being bought and the selling of US$95,527.
Highs & Lows| Changes to the highest and lowest traded rates for the US Dollar remained moderate on Wednesday. Notable changes to rates for the other regularly traded currencies in the foreign exchange market on Wednesday, include a fall of $3.96 in the highest buying rate of the Canadian dollar to $98.20, while the lowest selling rate jumped $5.70 to $93.70. The highest buying rate of the British Pound dropped $1.05 to $165.75 and the lowest buying rate dived $2.74 to $131.14, the highest selling rate dipped $3.56 to $170.64 and the lowest selling rate rose $1 to $158. Trading in the Euro resulted in a drop of $4.58 in the highest selling rate to $145.54 while there was a jump in the lowest selling rate of $3.20 to $138.