Jamaican dollar makes strong gains

The Jamaican dollar recovered the losses suffered at the close of trading on Wednesday as the selling rate closed on Thursday at $133 to US$1 as dealers sold US$40.57 million, down from $133.55 on Wednesday as US$42.75 million was sold.
Dealers bought just US$30.3 million on Thursday at an average of $131.77, down from $132.26 in purchasing US$45 million. Total foreign exchange traded on Thursday amounted to US$38 million being bought by dealers and sales of US$47.9 million. the amount purchased by dealers on Wednesday was boosted by sale of US$10 sold by Bank of Jamaica through their B-FXITT weekly auction.

NIR steady despite BOJ sales

Jamaica’s Net International Reserves slipped by just US$32 million in September according to data just released by the country’s central bank – Bank Of Jamaica ( BOJ).
According to BOJ the NIR stood at US$3.027 billion at the end of September down marginally from US$3.027 billion at the end of August. Reserves amounts to just over 19 weeks of Goods & Services Imports, the central bank states.
The change comes against the back ground of sale of US$41 million in B-FXITT weekly auction of foreign currency.

Jamaican dollar gains

Dealers in the foreign market bought US$36.76 million in US currency at an average rate of J$132.05, down $1.24 from Tuesday’s rate of $133.29.
The selling rate for the US dollar declined from J$134.05 on Tuesday as US$50.77 million was sold at an average rate of J$133.60 including US$5 million sold to Bank of Jamaica in the B-FXITT Standard Intervention Tool – buy operation, at an average J$133.65. At mid-day on Wednesday the average selling rate was $133.49 with only US$12.3 million then sold.
Overall foreign currencies purchased by dealers amounted to US$41.44 million, while selling accounted for $58 million for a net outflow of just under US$17 million. On Tuesday, net inflows of US$14 million came into the market, but for the US dollar currency, net inflows amounted to US$17 million.
For the next four weeks, the central bank will buy US$5 on Wednesday July 31 and August 8 and will sell $10 million to the market on August 19.

Forex volume up with B-Fxitt trade – Wednesday

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Bank of Jamaica bought US$15 million in the B-FXITT auction on Wednesday, with the average rates against the US dollar for accepted offer ending at $126.29. A total of 31 bids were received to sell US$21.85 million up to a rate of $128 and a low of $124.70
Dealers enjoyed inflows of all currencies amounting to the equivalent US$38.04 million compared to US$43.20 million bought on Tuesday and sold US$55.58 million, including the amount sold to Bank of Jamaica. US$44.03 million was sold on Tuesday.
At the close of foreign currency trading, dealers sold US$52.03 million, including the BOJ sales, at 37 cents more than on Tuesday with the US dollar selling rate closing at J$125.73, compared to J$125.36 in the sale of US$39.23 million on Tuesday. Purchases of the US currency by dealers, amounted to US$32.44 million, with the average rate declining 23 cents to $123.94, compared to US$40.56 million, with the average rate of $124.17 on Tuesday.
At mid-day on Wednesday dealers purchased US$14 million at an average rate of J$124.51 and sold $18.42 million at an average of J$125.38. At mid-day on the previous trading day, dealers purchased US$14 million at an average rate of J$124.51 and sold $18.42 million at an average of J$125.38.
The Jamaican dollar closed trading, with the selling rate for the Canadian dollar, dropped to J$97.54 from J$101.34 at the close on Tuesday. The selling rate for the British Pound declined to J$174.67 from J$176.07 previously and the euro fell versus the Jamaican dollar to J$154.27 to buy the European common currency, versus the prior selling rate of J$154.99.

US$ rate rises in BOJ FX auction

A total of 29 offers from dealers amounting to $18.35 million were presented for sale to Bank of Jamaica in the second buy side of B-FXITT foreign exchange auction held on Wednesday this week.
The bank accepted 22 offers for the US$12 million it offered to buy. Despite the excess supply, the rate for the US dollar rose above the average rates dealers sold to the general public at since beginning of last weeks. The average in the first buy auction held on April 11, resulted in an average rate of $125.42. The average rate came out at 125.93 for accepted offers but was J$126.24 for all amounts that were offered for sale. The highest priced offer was at U$127.50 and the lowest J$124.90.

The huge stock market blast is coming soon

Bulls may be lurching to pounce on Jamaican stocks.

The main market of the Jamaica Stock Exchange hit three new record closing highs this past week and is showing signs of climbing higher, much higher in fact.
That is a development that the general public is unaware of and smart investors cant take advantage of to make big gains in the months and probably years ahead.
The market has never had all the stars as lined up as they are now. Low Interest rates, the lowest on record in Jamaica, low inflation rate, a fluid foreign currency market. Liquid Jamaican dollars, of which the Governor of the country’s central bank Bryan Wynter, puts at $50 billion within the Banking sector. But it get even better. According the Wynter, interest rates are likely to go down some more as the high liquidity situation dictates it. 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.
Unbeknown to many, is the increased spending by government in March, well above what was originally planned. For investors this means more money in the hands of consumers, more sales and profit for listed companies, that now seems to be showing up in the coffers of corporate Jamaica.
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.

BOJ to buy US$17m from market

Bank of Jamaica will start the purchase of foreign exchange through their B-fxitt auctions with two weekly purchases scheduled for April announced in the banks four week forecast.
Since the end of November last year, Bank of Jamaica has had just two auctions of foreign exchange amounting to a total sale of $40 million.
The latest release on the banks foreign exchange market activity, show no sale planned over the next four weeks. The bank for the first time will have an auction to buy foreign currency from the market. Two B-fxitt auctions are so far announced for April, amounting to US$17 million, broken down into US$5 million on Wednesday April 11 and US$12 million on April 18.

BOJ cuts planned FX auction sale

Bank of Jamaica (BOJ) is cutting the amount it is committed to sell in its weekly foreign exchange auction B-FXITT, to US$29 million over the next four weeks.
The announced sale, is down from US$40 million that BOJ made available to Authorised Dealers and Cambios from the last Wednesday in September up to last week at US$10 million weekly. The amount to be sold this Wednesday will be US$10 million even as dealers have been selling off surplus foreign currencies, leading to an appreciation of the local currency since September. For the first two weeks of November US$7 million will be available, followed by US$5 million.
The amount to be sold is a fraction that the central bank will be buying from the system under the compulsory surrender requirement set by BOJ.

Ending FX surrender requirements

Jamaica’s Central Bank head quarters Downtown Kingston

The present arrangement where Bank of Jamaica requires foreign exchange dealers to surrender around 25 percent of their daily intake is to be phased out.
The central bank now considers the market deep and liquid enough for government entities to go directly into the market for their needs.
According to Bank of Jamaica, “the introduction of the buying side of B-FXITT will be synchronized with the gradual reduction of surrender and PSE requirements, and over time, these requirements will be terminated. This gradual transition will see more funds available in a more dynamic and transparent market.” Starting July 26, the central bank formally introduced an auction system for foreign exchange trading. The initial stage is the introduction of selling of funds to the market.
Bank of Jamaica (BOJ) currently purchases foreign exchange via three channels: regular surrender arrangements, the public sector entity (PSE) facility, and occasional direct purchases from individual financial institutions. The PSE facility in particular was considered a useful initiative to remove potentially distorting transactions from the foreign exchange market, but the central bank states that it is not flexible or synchronized enough to respond proportionately if a large entity experiences a sudden change in its foreign exchange needs. Also, while it began as a safeguard mechanism to protect a shallow and fragile market, the facility came with the price of a loss of transparency. Taking these and the surrender transactions out of the mainstream market means the market rate does not reflect the entire spectrum of foreign exchange transactions.
BOJ says that “with economic fundamentals improving and the foreign exchange market growing deeper, Jamaica is evolving towards a stage where the market is robust enough to handle these transactions without BOJ’s protection, and so these government agencies can freely settle their transactions in the market without causing disruptions. The market will therefore become more accurate and transparent by reflecting all major transactions, and daily rates will be a more accurate and credible reference of overall market activity.”
These pending changes mean that BOJ’s standard method of buying foreign exchange will become the what the central bank states is the “same efficient, market-friendly and transparent tool which it now uses to sell”. “BOJ says it “will retain the right to buy or sell foreign exchange outside of the standard B-FXITT schedule at any time if extraordinary conditions warrant, but will likely utilize a B-FXITT-type operation at those times instead of bilateral transactions, which will ensure that these transactions reflect current market conditions and are settled transparently at market-determined rates. BOJ’s avoidance of bilateral transactions will also benefit the market by encouraging dealers to trade more among themselves.”

Forex demand drops

The number of bids posted in the Bank of Jamaica B-FXITT auction on Wednesday dropped from 42 bids totaling $62.6 million last week, to 36 this week for only US$20.55 million this week.
The central bank made US$10 million available for purchase on Wednesday this week, 18 bids were accepted, with rates ranging from $130.05 to $130.50, with the latter for US$1.2 million. The average rate came out at $130.28, down from an average of rate of J$131.36 last week.
Bank of Jamaica sold US$30 million in last week’s auction on Wednesday to eligible Authorised Dealers and Cambios.