The Bank will be offering USD65 million over the next four weeks in its foreign exchange auction to eligible Authorised Dealers and Cambios.
The amount represents an increase over the quantity offered in August of US$35 million prior to the amount to be auctioned on Wednesday, 30 August.
September is usually a period when inflows tend to dip below normal levels and may be the reason why the amounts to be offered have been increased.
The weekly schedule outlined by the BOJ is: US$5 million on Wednesday, 30 August, the same amount as last week, US$10 million on Wednesday, September 6, US$20 million on September 13 and US$30 million on September 20.
The central bank is only returning to the market amounts it would have taken under the compulsory surrender of 25 percent from Authorised Dealers and Cambios during the month. It is unclear as to the reasons why Bank of Jamaica has not reduced their compulsory take from the market. In 200 the central bank hiked the amount when the price of oil was around US$100 a barrel as the amount to fund Petrojam was being provided by BOJ. Now that the price is around U$50 why is the weekly take not reduced?
In 2009, Bank of Jamaica established the Foreign Exchange Surrender Facility for public sector entities (PSE Facility). The aim of the facility is to centralize foreign currency demand of the public sector, especially Port Authority of Jamaica, National Water Commission and Petrojam. Under this facility Commercial Banks agreed to surrender fifteen percent (15%) of foreign currency purchases daily. The pre-existing requirement where Authorized Dealers and Cambios surrender within range of five percent (5%) to ten percent (10%) of their gross foreign currency purchases from commercial clients remains in effect. Therefore commercial banks are to surrender, in total between twenty percent (20%) to twenty-five percent (25%) of foreign currency purchases daily. At the start of 2015, the surrender requirements were increased thirty percent to thirty-five percent for Authorised dealers and twenty-five percent for cambios.
BOJ auction rate climbs to $129.15
Bank of Jamaica (BOJ) offer of US$5 million offer of it foreign exchange auction attracted 33 bids amounting to $15.2 million with rates as high as $129.42. The average of all bids made was $128.94 but the auction cleared at $128.97 with 11 bids accepted, at an average at $129.15.
The out turn in the daily foreign exchange market resulted in the US dollar selling rate ending at J$128.73 from J$128.54 previously. Dealers bought the US currency at an average of J$127.59, versus J$127.12 on Tuesday.
In the previous auction held on August 16, BOJ offer of US$10 million attracted 38 bids amounting to US$28.2 million at an average rate of $128.67. The average rate of 17 accepted bids was $128.74.
At the official start of the auctioning of foreign exchange BOJ announced that it will make US$10 million dollars available to authorized dealers and eligible cambios on Wednesdays up to August 16, totalling US$40 million. It is not clear why BOJ dropped the amount to US$5 million in the latest offer.
BOJ forex auction clears at $128.26
The exchange rate for the purchase on US$10 million on sale by Bank of Jamaica in its first official forex auction of US dollars, held on Wednesday, ended with an average of JS$128.26. The highest rate of a successful bid was J$128.30.
The rate contrast with the first auction done as a trial run, that was executed at an average rate of $128.76. Interestingly, the average selling rate that the US dollar was sold at on Wednesday in the interdealer forex market ended at an average of $128.2173 with the highest selling rate going at $147.60.
A total of 41 bids were received amounting to US$26.18 million and a total of 13 bids were accepted by the central bank. Bids are restricted to a maximum of 20 percent per institution for the amount offered with the minimum US$100,000. The highest accepted rate was $128.50 to purchase US$1,600,000. The lowest bid received was $128.30 that was partially allocated while the lowest bid fully allocated was $128.35 that purchased US$5,050,000.
Bank of Jamaica will make US$10 million dollars available to authorized dealers and eligible cambios by competitive bidding process each Wednesday, from Wednesday July 26 through Wednesday August 16, a total of US$40 million for the first four‐week period. The Bank will publish a report from each B‐BXITT operation on the same day, including the weighted average exchange rate arising from the operation.
The next forex intervention auction sale for US dollars is scheduled for Wednesday August 2, with settlement on Thursday August 3.
Jam$ gains on reduced trading
The Jamaican dollar recorded further gains at the close of foreign exchange Tuesday with the selling rate of J$128.46 for one US dollar, down from J$128.50 it ended at on Monday.
Inflows into the local foreign exchange market generated just US$23.84 million in all currencies while US$22.52 million was sold to the public. In USA dollar trading, inflows into the system ended at US$21.54 million while selling amounted to only US$20.36 million. Inflows are well down on the US$61 million that entered the system last week Tuesday and outflows the US$46 million of all currencies then traded.
The selling rate for the Canadian dollar inched up to J$99.01 compared to J$98.94 at the close on Monday, while the British Pound cost more at the close on Tuesday with J$166.91 buying the British currency versus J$166.38 on Monday but the Jamaican dollar gained value against the euro, with it taking J$145.20 to buy the European common currency on Tuesday versus Monday’s rate of J$146.61.