Xmas cash suggests higher growth – BOJ

Currency in circulating increased at a much faster pace that Bank of Jamaica projected in early December. According to the Central Bank “the faster currency growth possibly reflected improved GDP growth, employment and retroactive wage settlements during the period.”
During the last six days of December, Bank of Jamaica recorded net currency issue of $5.457 billion to financial institutions. This was substantially above the Bank’s projection for net issue of $412 million as well as the $860 million currency issue for the corresponding period of 2017 and average of $1,396 billion over the past 5 years. The currency issue for the week contributed to an overall growth of $23.6 billion or 21.4 per cent in the currency stock for December 2018, above the Bank’s projection for growth of $18 billion or 16.5 per cent. The increase for the month also exceeded that for December 2017 of 16.5 percent and was the largest growth in December since 2007.

Grace new HQ close to the end of construction in downtown Kingston

At the end December 2018, the currency stock amounted to $133.5 billion, representing an annual increase of 20.4 percent, compared to annual growth of 12.9 per cent at end December 2017. The Central Bank stated that “when the estimated change in consumer prices is taken into account, the real annual growth in currency at end-December 2018 was 15.9 per cent, compared to 7.3 per cent for the corresponding period in 2017”.
The Bank is anticipating, that most of the currency issued during December, will be redeemed in January. The release from the bank stated that, “for the last five years, net currency redemption in January averaged 75.8 per cent of the net currency issued in the preceding month.”

BOJ senses pick up in GDP growth

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Economic activity may has picked up pace in the latter half of the year compared with the first half, with a strengthening in real GDP growth and employment over the second half of the year, Bank of Jamaica is suggesting.
The central bank was commenting on the increase in money in circulation for December. “This projected acceleration in the growth in real currency demand for December 2018 is consistent with the higher growth rate that has been evident between August and November 2018,” the central bank stated. Economic growth in the June quarter was preliminarily placed at 2.2 per cent by the Statistical institute of Jamaica.
The bank went on to say, “when the forecasted change in the general level of consumer prices is taken into account, the projected real growth in currency for the 2018 is 10.5 percent, which is higher than the real growth of 7.3 percent for the previous year.”
The projected currency stock of $128 billion at end-December 2018 represents an annual growth of 15.5 percent, an acceleration when compared with the 12.9 percent recorded at December 2017.
Bank of Jamaica projects that the value of currency issued by the Bank will increase by approximately $18 billion (or 16.5 percent) in December 2018 to end the month. The central bank states that the projected growth for the month is broadly consistent with the 16.5 percent growth recorded for December 2017 as well as the five-year average growth rate of 17.3 percent for December.
BOJ net issued $4.2 billion in currency for December up to 14, this year (representing a 3.8 percent growth for the month to date). This compares to net currency issue of $1.4 billion over the same period in 2017.

Crude oil sinks below U$49

The price of crude oil on the world market sank to US$48.49 in early morning trading, the lowest levels since October 2017. The price peaked at US$76.10 in early October this year.
The trend suggests that the price will go even lower with increasing supplies said to be coming from production in the USA and concerns that the global economy is slowing and would use less oil.
The change in price has significance for the Caribbean region that are mostly net importers of oil, as well as Trinidad and Tobago who are producers of oil, and will earn far less income from the lower price. For Jamaica, it is likely to tame inflation as it did in November, when the country recorded zero inflation. It will also make the Bank of Jamaica’s inflation target of 4 to 6 percent targeting for the current fiscal year that the Country’s Central bank states was set by the Minister of Finance and the Public Service in September 2017, far more challenging than it was before.
If the price remains below the US$50 mark for a prolong period, then Jamaica could save somewhere in the region of US$$300 million per annum and that could positively affect the exchange rate, for the local currency.

Business confidence rising again

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Corporate executives Perception of Present and Future Business Conditions increases in the latest survey done on behalf of Jamaica’ central bank for September this year.
The Present Business Conditions Index increased to 106.6, up from 100.8 recorded in the previous survey in July. The Future Business Conditions Index also increased to end at 128.2 relative to 122.7 in the previous survey in July. The increase in the Present Business Conditions Index reflected a rise in the number of respondents of the view that conditions are “better, ”the report from Bank of Jamaica stated. The out turn for the Future Business Conditions Index mainly reflected a decrease in the proportion of respondents who believe that conditions will be “worse.”
Future Business Conditions fell from a peak of 155.1 in October 2016, but fell since then and has bounced around quite a bit. The recent decline seems to have coincided with the slippage in the exchange rate of the Jamaican dollar.

More gains for Jamaican dollar

The Jamaican dollar gained almost one percent in value for the past week, with the selling rate ending the week at J$132.55 to one US dollar, an improvement over the J$133.80 it was sold for at the close of the previous week.
The local currency closed on Thursday with the selling rate at $133 and buying at $131.77, on Friday the buying rate closed at $131.33 or 44 cents less than on Thursday.
Unlike the previous week when dealers bought $48.8 million in US currency and the equivalent of US$56.6 million in all currencies and sold $46 million in US currency and US$53.2 million in all currencies, this past Friday only US$32 million was purchased in United States dollars and US$34.8 million in all currencies with US$43.74 million sold in US dollars with a total of US$44.67 million of all currencies.
On Wednesday coming, Bank of Jamaica will have it last scheduled sale for October when it auctions off US$10 million to the market that could lead to further revaluation of the local dollar.

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.

BOJ FX sale pushes rate down

BOJ sold US$11M in today’s BXFITT auction.

The average rate for the Jamaican dollar auctioned by Bank of Jamaica in today’s B-FXITT Standard Intervention Auction came out at $135.42 down from $136.55 at last week’s auction.
Bank of Jamaica offered US$11 million for sale in today’s B-FXITT auction with 42 bids received covering US$23 million. Last week 41 bids were received amounting to $26.15 million for US$11 million on offer.
The country’s central bank will be offering US$41 million in sales over the next four weeks, including $11 million next week and US$10 million for the other three weeks up to October 17.
Today’s average rate compares with an average buying rate of $134.612 for purchase of US$33.75 million in Tuesday’s foreign exchange trading and an average rate of $135.56 with US$37.67 million being sold. On Monday, Dealers bought US$42.19 million at an average of $134.87 and sold US$42.19 at $135.95.
On Wednesday, the foreign exchange market closed with dealers buying US$56.88 million in all currencies which included US$49.86 million in US dollar currency at an average rate of $134.73 and selling a total of US$519 million in all currencies with the US dollar accounting for US$38.27 million at an average of $135.65, up slightly on Tuesday selling rate.

BOJ pumped US$65M in FX market last week

Bank of Jamaica (BOJ) scheduled B-Fxitt auction last week saw 43 bids seeking to purchase US$39.9 million but only $15 million was on offer, leaving a large amount of unsatisfied demand.
Only 17 bids succeeded in getting a portion of the funds offered for sale, but then not every bid really wanted the funds. The bids left the average rate at $138.19, with $137.90 being the lowest rate that succeeded. The lowest fully successful bid was $137.97 for US$1 million. The lowest bid received was $131.10 to purchase US$1.5 million.
On Friday, BOJ offered US$40 million in what they called a flash intervention tool. On Friday August 31, last year BOJ also had a flash intervention sales that pushed the amount of buying in the foreign exchange market on that day to US$76 million. BOJ sold US$5m on the Wednesday of that week.
The flash intervention this past week, was clearly to satisfy the unmet demand from Wednesday’s auction, 42 bids were presented amounting to US$76.9 million leaving U$26.9 million of unmet demand. The average rate declined to $137.49, with the lowest accepted bid price being $136.65 and the highest being $138.70. The lowest bid that was fully allocated was US$8 million at $137.00. Bids came in as low as $129. The lowest bid that had some success was $136.65, and this compares with $137.90 on Wednesday, suggesting that those bids that did not succeed included a large amount of low bids made to satisfy the requirement that all dealers must put in a bid. On Wednesday, this week

BOJ sold US$65M into the FX market last week.

BOJ will be carrying out their usual auction at which US$15 million will be made available, to be followed by US$10 million each, on September 5 and 12.
On Thursday, dealers bought US$33.9 million at $136.37 and sold US$35.3 at $137.96, up from a rate of $137.48 on Wednesday. On Friday, US$73.2 million was purchased by dealers at $136.75 and they sold US$46.2 million at $137.90. On Monday dealers bought US$45.5 million at $136 and sold US$50.3 million at $137.52, a fall from Friday’s Average rate.

Investors push interest rate to 1.74%

Liquidity remains high, in the Jamaican financial market with investors driving the average to 1.74 percent on Bank of Jamaica (BOJ) 30 days certificate of deposit earlier this week, as demand of $24 billion chased $8.5 billion on offer.
In mid -July, more than $50 billion in government bonds expired with interest, but government took up less than $15 billion in new bonds, as it paid back the bonds in cash, using a large draw down from funds held at Bank of Jamaica by Public sector entities, amounting to $50 billion.
At the end of June, Public sector entities deposit at BOJ was $97 billion but fell to $46 billion after the payout of the bond. The payout added to the high level of liquidity in the market that helped drive interest rates down to 2 percent at the mid-July Treasury bill Auction.
On Tuesday, July 31, applications were received by BOJ for $8.5 billion BOJ 3 percent Certificate of deposit through a competitive price auction. The issue attracted 61 bids amounting to $24 billion, only 41 bids were successful, with the average yield of 1.74 percent. The lowest submitted rate was 1.39999 percent for $40 million and the highest was 6 percent for $40 million. The highest rate for full allocation was 1.83 percent in the amount of $100 million.
The average rate is below BOJ’s overnight rate of 2 percent and the last 91 days Treasury bill rate of 1.95963 percent.

Jam$ falls vs US rise with others- Wednesday

The Jamaica dollar slipped moderately in value at the close of foreign currency trading on Wednesday against the US dollar but gained against the others.
Inflows of all currencies amounted to the equivalent US$30.57 million compared to US$37.57 million bought on Tuesday and sold US$42.74 million compared to US$42.54 million sold on Tuesday.
At the close of foreign currency trading, dealers sold US$41.45 million, 5 cents more than on Tuesday with the US dollar selling rate closing at J$125.42, compared to J$125.37 in the sale of US$40.38 million on Tuesday. Purchases of the US currency by dealers, amounted to US$28.57 million, with the average rate adding 4 cents to end $124.04, compared to US$35.51 million, with the average rate of $124 on Tuesday.
At mid-day on Wednesday dealers purchased US$13.07 million at an average rate of J$124.36 and sold $14.19 million at an average of J$125.26. At mid-day on the previous trading day, dealers purchased US$ US$13.07 million at an average rate of J$124.36 and sold $14.19 million at an average of J$125.26.
The Jamaican dollar closed trading, with the selling rate for the Canadian dollar, falling to J$97.43 from J$100.50 at the close on Tuesday. The selling rate for the British Pound declined to J$167 from J$171.54 previously and the euro declined versus the Jamaican dollar to J$151.76 to buy the European common currency, versus the prior selling rate of J$152.19.