Jamaica’s international reserves surged to $4.25 billion at the end of August, with net reserves climbing to $3.67 billion, up from a net of US$2.74 billion at the end of July.
The increase came from a number of sources with the inflows from the issue of bonds by the Government of Jamaica (GOJ) as well as inflows from the foreign exchange market.
“The increase in the NIR of US$933 million in August 2017 was attributed mainly to receipts from Eurobond of US$834.4 million by GOJ, net purchases of foreign exchange by BOJ from authorised foreign exchange traders and issuance of BOJ USD CDs,” Bank of Jamaica confirmed in response to an IC Insider.com’s query.
“Notably, the impact of the large inflow from the GOJ Eurobond is transitory. During September, GOJ will pay approximately US$530 million (principal and interest) to investors on prepayment of two USD Bonds,” the BOJ’s response concluded.
Data for the first two weeks in September suggest that there is likely to be no new net inflows for the month from the regular foreign exchange market and the NIR could end at just about US$3.1 billion after the payout of the GOJ bonds, if BOJ does not issue new CDs to mop up the liquidity that would flow from the payout.
Jamaica’s NIR jumps by US$250M
Jamaica’s Net International Reserves (NIR) benefited from buoyant flows during the summer months to shoot up by US$250 million, taking the net reserves US$2.52 billion at the end of August. The reserves shot up by US$124 million in July and jumped by US$126 million in August, as the banking system raked in much more foreign currency over the two months than they sold.
In spite of the net heavy inflows during the period, the local dollar declined marginally by less than two percent against the critically important US dollar, with the selling rate moving from $125.46 at the end of June to $127.57 at the end of August.
The build-up of the NIR took place over the period when bankers net purchasing of foreign currency amounted to just under US$300 million in July and August.
The reserves at the end of August are above the 2016 peak of US$2.42 billion at the end of March, just before the central bank intervened by selling to the market, pulling the reserves to a low of US$2.265 billion in June.
The build in the NIR places the country’s central bank in a good position to control of the foreign exchange market in the months ahead, before the next period of higher inflows starts in mid-December.
NIR shoots up in July
Net International Reserves of Jamaica shot up by US$124 million in July, to end at US$2.39 billion. The build-up has taken place over the period when bankers purchased US$100 million more than they sold, with the amount climbing to US$116 million up to the first week in August and US$124 million including Monday’s intake.
The reserves are just slightly below the amount of US$2.42 billion it was at the end of March at the 2016 peak, just before the central bank had to intervene by selling to the market with the reserves declining to a low of US$2.265 billion in June, just above the US$2.2 billion at the end of January.
With August being another month when inflows of foreign currency is high, the prospects are good for further build-up of funds in the system, before the end of the month and could place the country’s central bank in full control of the foreign exchange market in the months ahead before the next period of higher inflows starts in mid-December.
NIR up in September
Bank of Jamaica paid back US$30 million to the International Monetary Fund (IMF) during September, but the Net International Reserves (NIR) climbed from US$2.12 billion at the end of August to US$2.2 billion at the end of September, an increase of US$79 million.
Gross reserves amounts to $2.72 billion compared with $2.67 billion at the end of August.Estimated Official Gross Reserves represent 27.17 weeks of Goods Imports at the end of September, up from 26.68 weeks, in August and 19.52 weeks of Goods and Services Imports, an increase over the 19.17 weeks in August.
The reserves place the central bank in a good position to intervene in the foreign exchange market during the rest of the year, if they so desire. Importantly, it gives them the physiological advantage to keep speculators guessing as to their next move, now that the rate of the Jamaican dollar has been gaining, against the US dollar, since they had a major intervention, in the market on July 10.
Interestingly, the months of high demand and low supply commencing September, should end by Mid December has so far seen no serious dip in supply and no large demands, allowing the local dollar to appreciate. There are some indications that financial institutions who went long in their holdings of foreign exchange, have been offloading, with the absence of any serious overhang of demand that cannot be satisfied.
It does appear that the central bank will be adding to its holdings of foreign currency, as investors reduce their holdings, with the winter months not far away, a period when supply is usually higher than demand.
Jamaica’s NIR passes US$2b
Jamaica’s Net International Reserves (NIR) now exceeds US$2 billion as it sits at US$2.18 billion, up by US$805 million during July. The increase reflects the US$800 million bond, the government raised recently on the international market.
The gross amount of the reserves is US$2.8 billion, up by US$793 million during July, of this amount US$606 million is due to the International Monetary Fund (IMF) and represents primarily, funds obtained from the IMF for liquidity support for the financial system, when the JLP government undertook the first debt exchange, back in 2010.
Reserves of Goods Imports amount to 28.13 weeks and 20.30 weeks of Rreserves of Goods & Services Imports.
NIR jumps US$211M to US$1.376 Billion
The net International reserves (NIR) jumped US$211 million in June to reach US$1.376 billion. The NIR now represents 19.90 weeks of goods imports and 14.57 weeks of goods and services imports.
The Gross NIR amounts to US$2.016 billion at the end of June. During the month the central bank offered a series of US dollar based bonds and this would have helped to swell the numbers.