The noose continues to tighten around the necks of Cambios. According to a recent release from Jamaica’s central bank, the Jamaica Bankers’ Association has given notice that some of its members will discontinue accepting foreign currency banknotes from or issuing foreign currency banknotes to Money Service Businesses (MSBs), effective on or before 8 September 2015.
As a consequence, deposit-taking institutions (DTIs) who act as surrender agents, by accepting funds on behalf of BOJ under the Bank’s Surrender Requirement, will not be accepting surrenders from cambios in cash.
Cambios that will be impacted by this action will be granted a 6-month moratorium on surrenders to BOJ, effective 17 August 2015, while alternative options are being explored to facilitate cambios to comply with the surrender requirement. At the end of the moratorium period on 17 February 2016, or before, BOJ will communicate with affected cambios on the new arrangements.
“Note that non-cash surrenders are unaffected by the banks’ decision, and in that regard, the moratorium does not apply to cambios that surrender via the use of noncash instruments” the BOJ release concluded.
Noose tightening around Cambios
J$ just 11 cents away from $117 to US
The J$ is just 11 cents away from $117 to the US dollar on Thursday
In US dollar trading, dealers bought US$27,666,499 compared to US$26,945,527 on Wednesday. The buying rate for the US dollar increased 11 cents to $116.22 and US$26,103,111 was sold versus US$33,784,230 on Wednesday, the selling rate rose 9 cents to $116.89. The Canadian dollar buying rate fell 36 cents to $92.31 with dealers buying C$870,248 and selling C$445,174, at an average rate that fell 28 cents to $94.42.
The rate for buying the British Pound gained 49 cents to $181.36 for the purchase of £955,239, while £755,546 was sold, at an average rate that declined 46 cents to $183.37. At the end of trading, it took J$130.63 to purchase the Euro, 12 cents more than on Wednesday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$127.92 for 4 cents more than Wednesday’s rate. Other currencies bought, amounted to the equivalent of US$98,887, while the equivalent of US$374,801 was sold.Highs & Lows| The highest buying rate for the US dollar rose 12 cents to $117.22, the lowest buying rate dropped $4.91 to $90.70. The highest and lowest selling rates remained at $122.52 and $95.61 respectively.
The highest buying rate for the Canadian dollar moved up $1.40 to $96, the lowest buying rate remained at $74.95. The highest selling rate added 60 cents to $98 and the lowest selling rate dipped $1.50 to $90.30. The highest buying rate for the British Pound, rose 15 cents to $184.15, the lowest buying rate remained at $147.74, with the highest selling rate falling $3.54 to $186.92 and the lowest selling rate dipped $2 to $178.
Treasury bill rates fall
At the latest auction for the issue of Treasury bills held today, rates on the 28 days, the 91 days and 182 days bills declined from ay auction, continuing the decent starting March last year.
The latest rate on the 91 days instrument is now at 6.48 down from 6.57 percent at the May auction and the 182 days is now at 6.63 percent, a fall from 6.7 percent. The 28 days instrument ended with a rate of 6.23 percent down from 6.27 percent in May. The rates are far off from the BOJ CD rate of 5.25 percent.
A total of $1.2 billion was available for the public to bid on, split equally between the three issues. The 28 days offering attracted $475 million the 91 days attracted $602 million and the 182 days instrument attracted $828 million. With the interest rates on some of the Jamaican government’s bonds tied to Treasury bill rates, the latest development of lower rates will mean lower cost for the variable rate bonds.
With inflation looking as if it could end 2015 around 3.5 percent Bank of Jamaica may have to intervene by lowering the CD rate to speed up the fall in Treasury bill rates.
More choices for investors
Barita
There were times, not so long ago, when things in the local financial markets were much simpler than they are now. Well up to just a few years ago there were only three unit trust companies operating and about 6 or 7 schemes. At the end of 2014 there were 22 different unit trust offerings and currently there are 27.
NCB Capital Markets added two new ones this year and Barita has just launched two new ones. By the end of 2015 the field is likely to get even more crowded with a number of institutions already indicating that they will be launching new schemes, included are JMMB Securities and Stocks and Securities. Part of the reason for the mush rooming of these schemes is occasioned by the dictates of the IMF and the World Bank who considered the risk financial institutions were taking by issuing repos using government securities as the flip side of the trades as too high and could pose major problems to the financial system. The result is a change in the rules that now require smaller amounts of funds to be routed through managed schemes, where the liability is left with the investors rather than the financial institutions, as is now the case. The market has also changed, with investors looking for a greater number of opportunities to invest in.
Barita Unit Trust is the latest entity to launch new schemes, bringing their suite of schemes to 6 in April. The latest are; the Barita US$ FX Growth Portfolio which invests mainly in international equity, and the Barita JA$ Real Estate Portfolio which invests primarily in commercial and residential buildings for lease or sale.
The US$ FX Growth Portfolio is a US Dollar denominated equity portfolio with investments in foreign currency ordinary and preference shares of countries within the Commonwealth, Caricom and the United States and may extend to other sovereign governments as prescribed by the Financial Services Commission and the Bank of Jamaica. A minimum purchase of 100 units is required to open an account, the current price per unit is US$1.
Barita Property Fund invested in 138 Student Living shares
The real estate portfolio is JA$ denominated with investments in commercial or residential buildings for lease or sale and may also become financiers of real property developments and or participate in construction or financing of such structures.
Real Estate Portfolio investments must be held for a minimum of three years with a moratorium of 6 months’ notice required for encashment of the investment. At the launch, the managers stated that the fund has started off with an investment in 138 Student Living shares that are listed on the Jamaica Stock Exchange (JSE). A minimum purchase of 100 units is required to open an account and the current price is $5,000 per unit.
How the new funds will perform is left to time. What is known is the Cameron Burnett who is associated with the US dollar equity fund, has been investing in the overseas’ market for several years successfully, the fund should benefit from his experience. Hopefully, they will be able to navigate what is set to be a choppy period ahead for the US stock market, with interest rates set to go up.
Locally, real estate values should grow at an increasing pace as the government keeps the target of a balance fiscal operation firmly in sight and be committed to achieving it, which will lead to lower interest rates and higher asset values.
Barita Unit Trust is a subsidiary of Barita Investments a JSE listed stock.
Treasury bill rates slide continue
Government of Jamaica Treasury bill rates, declined in the latest auction of the short-term debt instruments, opened today at the Bank of Jamaica offices. The 182 days instrument closed at its lowest level since May 2013 when it then cleared at 6.44 percent.
At today’s auction the average rate came in at 6.787 percent, down from 6.998 percent in March and the 91 days ended at 6.06 percent, a decline that is well down on the previous rate of 6.72765 percent. 
The declines come against the background of consistently falling rates since the start of the second quarter last year, negative inflation and a cut this month in Bank of Jamaica’s CD rate, from 5.75 percent to 5.50 percent.
The implications of the fall include potential for lower lending rates down the road, stimulation of interest sensitive investments such as stocks and long term bonds and of course persons looking for income from fixed interest securities will be getting less income going forward than in the recent past.
January remittances climb
Jamaica enjoyed a record haul in remittance inflows for the month of January with US$166 million garnered in January this year, according to data from Bank of Jamaica.
The flows represent an increase of US$8 million or 5.1 percent more than the amounts collected in January 2014. The growth in remittance inflows and a contraction in outflows resulted in net remittance inflows increasing at a faster pace than total inflows, with net remittances of US$147.4 million for January 2015, an increase of US$9.5 million or 6.9 percent over January 2014.
The gain in net inflows would have been occasioned by greater stability and availability of foreign exchange locally.
J$ slips against US & Pound- Friday
the Jamaican dollar slipped in value on Friday against the British Pound and the Us dollar but gained against the Canadian with purchases of all currencies by dealers amounting to US$41,792,863 compared with the US$36,782,160, on Thursday and selling of the equivalent of US$42,252,844 versus US$51,379,595 sold on Thursday.
In US dollar trading, dealers bought US$36,360,074 compared to US$31,445,586 on Thursday. The buying rate for the US dollar put on 3 cents to $115.15 and US$39,309,385 was sold versus US$49,329,254 on Thursday, the selling rate rose 5 cents to $115.64 The Canadian dollar buying rate jumped $1.34 to $92.04 with dealers buying C$2,968,466, and selling C$1,859,975, at an average rate that gained 39 cents to $92.64. The rate for buying the British Pound dipped 33 cents to $176.71 for the purchase of £1,911,861, while £763,754 was sold, at an average rate of $178.63, down by 1 cent. At the end of trading it took J$129.62 to purchase the Euro, $1.67 less than on Thursday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$127.15 for $1.67 less than on Thursday. 
Other currencies bought, amounted to the equivalent of US$126,015 while the equivalent of US$273,697, was sold.
Highs & Lows| The highest buying rate for the US dollar, the lowest buying and the highest selling rates remained at $115.80, $94.36 and $120.91 respectively. The lowest selling rate dropped $17.11 to $96.39. The highest buying rate for the Canadian dollar jumped $3.20 to $96.20, the lowest buying rate fell 45 cents to $73.25. The highest selling rate rose $1.74 to $97 and the lowest selling rate jumped $11.74 to $87.25 The highest buying rate for the British Pound, slipped 80 cents to $178.10. The lowest buying rate fell 54 cents to $142.88, the highest selling rate lost $3.04 to $181.86 and the lowest selling rate declined 35 cents to $172.15.
Treasury-bill rates up
Interest rates on government of Jamaica latest Treasury bills auction rose for the first time since peaking in March last year. The three offerings at the February 20 auctions, resulted in a rise in rates for the 28 days and the 182 days notes, while the rate on the 91 days Treasury bill declined moderately.
The 182 days note closed at 7.164 percent, an increase from 6.99 percent at the January auction. The rate for the 91 days Treasury bills fell to 6.8796 percent, slightly down from of 6.8817 percent in January, while the rate on the 28 days ended at 6.417 percent up, from 6.295 percent at the January auction.
The change in the movement is consistent with the slowing pace of change at which the 182 days treasury rates were falling, having slowed from 0.34 percent dip in November to 0.15 percent at the January issue.
With Bank of Jamaica’s projection for inflation in 2015, in the range of 3-5 percent and with inflation for January coming in at negative 0.5 percent, its unlikely that the latest increase in the rates will last for too long, as there will be lots of room for the treasury rates to decline sharply in the months ahead.
All three instruments offered, were for $400 million each, with demand for the 28 days instrument amounting to $690 million versus $1.15 billion in January. The 91 days instrument attracted $1.298 billion up from $706 million in January and the 182 days instrument pulled in $822 million up from $717 million at the January auction.
Remittances up 5% for 2014
Remittance inflows into Jamaica, continue to grow at consistent pace for 2014, and is now at the highest levels ever. The latest data from Jamaica’s central bank, Bank of Jamaica revealed that total remittance inflows for October last year, climbed US$9 million or 5.2 percent to US$180 million, compared to the same month of 2013.
For the month, net remittances were US$160 million, an increase of US$8 million or 5.3 percent relative to the 2013 corresponding period. “These inflows were above the average of US$161.8 million for the previous five corresponding periods,” the BOJ report stated.
For the review period, total remittance inflows amounted to US$1.784 billion, for an increase of US$81 million or 4.8 percent. Net remittances for the calendar year to October were up US$90 million or 6 percent to US$1.59 billion, relative to the corresponding period of 2013. The growth of net inflows seemed tied to greater stability of the exchange rates of the Jamaican dollar and more availability of foreign exchange in the local market, in 2014 compared to 2013.
GOJ T-bill rate decline conftinues
Ministry of Finance Building Kingston, Jamaica
The 182 days note that fell to 7.14 percent at the December auction, the lowest level since June 201, returned a lower rate in the January auction at 6.99 percent.
The pace at which the 182 days treasury rates are falling, have slowed from 0.34 percent dip in November to 0.15 percent at the latest issue. With the latest announcement by Bank of Jamaica on projection for inflation for 2015 being in the range of 3-5 percent there will be lots of room for the treasury rates to decline sharply in the months ahead.
The latest auction, dated January 14, 2015, for the 28 days instrument, ended with an average rate of 6.29528 percent. The rate fell from the average rate of 6.38 percent at the December auction and from 6.71 percent in November and 6.826 percent in October, as $1.1 billion up from $686 million in December, chased the $400 million on offer.Investors’ demand for the 91 days Treasury bills, climbed to $706 million, from $531 million in December, but is still well below the $1.042 billion that chased the November auction offering. Demand for the longer-term 182 days instrument, was down to $717 million from $925 million for the December auction. The amounts available were $400 million for each for the Treasury bills on offer.
The Treasury bill for the 91 days period, Friday, January 23 to mature on Friday, April 24, attracted an average yield of 6.8817 percent down from 6.956 percent in December. November’s rate was 7.052 percent, 7.336 percent in October and 7.46952 percent, at the September auction. At the August auction the average rate out turn was 7.46767 percent. The yield for July was an average of 7.63643 percent, for the June issue 7.65893 percent and 8.2 percent in May, for the Treasury bill of same duration.
The offer of 182 days duration, dated December 2014, maturing on June 19, 2015, resulted in an average interest rate yield of 7.14 percent, down from 7.387 percent at the November’s auction. At the October auction the average rate declined to 7.73187 percent from 7.99887 percent, at the September auction, 8.11578 percent, in August, 8.21982 percent at the July’s auction and 8.36502 percent for the June issue, of the same duration. At the May auction, the rate came out at 8.932 percent.
