Jamaica’s remittances up again in October

Total remittance inflows climbed a respectable 8.8 percent for an increase of US$24 million to US$296 million, up from US$272 million in 2020.
The increase continues the robust growth remittance inflows enjoyed since May last year. It puts the total inflows for the year to date at US44 million short of the total intake for 2020, when US$2.905 billion was taken in for the year to the end of December. At the pace inflows have grown, the take for the current year could hit a record US$3.5 billion, data released by the Bank of Jamaica is suggesting.

NCB sold US$874 million short

The US dollar peaked against the Jamaican currency in July as reflected in Bank of Nova Scotia selling the currency at the highest rate since June at an average of J$157.3698 on July 29 and Citibank selling at an average of US$157.8402. Last Friday, Bank of Nova Scotia sold the US dollar at an average of J$150.3714 and Citibank at $149.08. The indications are that these rates are likely to decline further, with more net selling by National Commercial Bank as the Jamaican dollar goes through one of its frequent yearly swings, in response to demand and supply of the US dollars.

NCB Financial Montego Bay branch

NCB sold off more than twice the amount of US dollars they purchased into the foreign exchange market, since the beginning of June this year up to Friday last week, with the bank selling US$1,298,524,926 or US$874,064,897 more than the US$424,460,029 purchased from the public. In 2020, NCB sold $900 million US dollars more than they purchased.
Data show that net purchases by NCB took place on only 3 days since the start of August. NCB net sales would include the sale of US dollars that emanated from the conversion of the surplus of other currencies into US dollars. The net position reflects a definitive selling short by NCB, with demand for US dollars waning one source informed ICInsider.com and the view that the situation won’t change before December when demand is expected to dip further and supplies increase.
In contrast to the actions of NCB, Bank of Nova Scotia the second largest foreign exchange trader bought US$511,485,130 and sold US$507,936,088 between the beginning of June and Last Friday, data from Bank of Jamaica shows.
Other developments in the foreign exchange market that could have a marked impact on liquidity are the continuing growth in remittance inflows in 2021 over the record 2020 flows. Bank of Jamaica draining of liquidity in the financial system has led to increasing interest rates on BOJ CDS from under one percent a few weeks ago to nearly two percent this week. Recovery in visitor arrival, with August arrivals approaching 80 percent of arrivals in 2019 and well over that of 2020. Increased exports earnings and of course increased imports cost.

Remittances slow from torrid pace

Jamaica’s remittances inflows slowed from the torrid pace experienced between May, last year to May this year, with an increase in June and July of 10 percent each over the record levels of 2020 with increases of 42 percent and 37 percent respectively in 2020 over 2019 and bringing the year to date growth to 30.4 percent, down from 42 percent to May this year.
According to a release from Jamaica’s Central Bank, June enjoyed inflows of US$303 million versus US$275 million last year and July US$324 million, up from US$293 million in 2020. For the year to July, the country has garnered US$2 billion up from US$1.56 billion for the same period in 2020. Remittances appear on track to hit US$3.5 billion by the end of the year if the recent trend continues which would be US$600 million than last year and US$1.1 billion over 2019.

Remittance boom continues for Jamaica

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Jamaica continues to benefit from a big surge in remittance inflows that started in May last year and is continuing with a big 28.7 percent jump to US$309 million in May this year, from $240 million in May last year.

This year’s performance is important as it was in May 2020 that the big upsurge in inflows commenced, with May 2020 inflows rising by 15.7 percent over 2019 inflows, bettering the decline recorded in March and April last year to the same months in 2019. For the year to date, total remittance inflows are up an incredible 42 percent over 2020 to reach US$1.4 billion for the five months period from US$987 million in 2020.
With the final seven months of 2020 generating inflows of $1.9 billion, total inflows for the current year should exceed US$3.4 billion and is likely to move closer to $3.9 billion based on the outturn for June this year over 2020.
Persons and businesses interested in foreign exchange developments for Jamaica should pay keen interest in what is happening in this market segment. If the remittances this year hold in 2022, with the rebound in stopover visitor arrivals set to return to normal levels in that year as well, would Jamaica be in a comfortable position for the central bank to build up reserves handily and it could also lead to some revaluation to the local currency.

Remittances surged 65%

Remittances into Jamaica surged a massive 65 percent in March, this year over the inflows for the same month in  2020 and probably the strongest monthly rise on record. Inflows saw US$328 million flowing into the financial system compared to just US$199 in 2020.

Jamaica’s Central Bank

The highest growth in 202 was June with an increase of 42 percent and inflows of US$275 million, while December with US$301 million was the only month that saw inflows reaching the US$300 million mark after it increased 35 percent over the prior year’s period.
For the year to date, inflows are up 42 percent over 2020, with increases of 33 percent in January and 27 percent for February. The development for the first quarter indicates that the country is on target to exceed US$3 billion in one year, for the first time, in 2021, with 2020 reaching a record US$2.9 billion. The trend suggests that 2021 is on track to reach or exceed US$3.4 billion.

Jamaica’s reserves spike US$100m

Jamaica’s Net International Reserves climbed US$100 million higher in May to reach US$3.42 billion from US$3.32 at the end of April after a $300 million surge in March with a rise of US$303 to US$3.32 billion from US$3.016 billion at the end of February, this year.
The country’s gross reserves are now at US$4.35 billion and include US$930 million due to the International Monetary Fund. The increase in May comes at a time when inflows from tourism are at the highest levels since March 2020 as the sector makes rapid strides in recovery, with May having the highest number of overseas visitors since the country reopened its borders to tourist in June last year. Reports from the tourism industry suggest that visitor arrival numbers for June and July will be appreciably better than for May and should add to foreign currency inflows into the country and most likely the NIR as well.
The country is also benefitting from a continued increase in remittances inflows that became evident since May 2020.
The reserves are at the highest sustained levels in the country’s history. The net reserves represent an estimated 30.57 weeks of Goods & Services imports for Jamaica.

Remittances to exceed US$3B for the first time

Remittance inflows for January and February this year to Jamaica grew by 29.8 percent from US$367 million to US$477 million, and now seems set to push total inflows to more than US$3 billion for the year and the first time ever that this landmark would have been reached, having hit US$2.9 billion in 2020.
Total remittance inflows for February rose 27 percent to US$236 million from US$186 million in 2020.
The gains this year come in contrast with the similar period last year US$3 billion hat grew by 9 percent over 2019, well off the 30.85 percent average monthly increase between May and December last year.
In 2020, April numbers fell nearly 10 percent versus inflows for April 2019 and could jump sharply in 2021, thereafter the big surge in inflows will probably return to more moderate growth levels in keeping with recent growth rates that have been lower than 10 percent.

NCB sold a stunning US$900M net in FX market in 2020

Jamaica’s largest commercial bank may not be Jamaica’s central bank, but their size and profitability probably rank them just behind Bank of Jamaica as the most powerful and influential financial institution in the country. NCB’s influence on the local forex market is only exceeded by that of BOJ, no other bank comes close, locally and their power and reach may have saved the country from steep devaluation and a major rundown of the NIR.

In September, after the Jamaican dollar rate versus the US dollar climbed above J$151, ICInsider.com was reliably informed that NCB management thought the rate was overextended and the bank sold large amounts into the market that helped to push the rate down towards $142 by the month end. The sales were made easier by the banking group, with the confirmation that they had raised US250 million from the issuance of diversified payment rights for payments due from correspondent banks.
NCB is not the darling of a large segment of Jamaican society as they dominate so much of the financial sector. Many Jamaicans see the multi-billion profit of the NCB Group as insane in a country where the majority struggle financially. Worse, many small customers of the bank see them as uncaring and lacking good customer relation practices.
The extent of NCB’s impact on the local foreign exchange market is not fully known. There are strong views by many with knowledge of developments within the financial sector that sees National Commercial Bank as the main players that influence the value of the Jamaican dollar and they do not like it.
Data out of the Bank of Jamaica for 2019 and 2020 indicate clearly that NCB impact on the market is extremely significant, but not in the manner many persons think. The data shows that when NCB is not a major net seller in the market, the exchange rate tends to depreciate and when they are not net sellers, the rate tends to appreciate.
In the period from the start of 2020 to late September, NCB sold a net of US$692 million to the market, in stark contrast to their nearest rival – Bank of Nova Scotia. BNS bought a net of US$38 million over the same period. In September last, NCB sold a net of US$127 million short and only had net purchase on just three days in the month.
NCB’s net sales in 2020 follow a significant US$453 million net sales for the twelve months in 2019. NCB sold a net of US$217 million to the system between October and December last year, bringing the total for the year to a stunning US$909 million.
According to a spokesperson for NCB, the bank actively manages its foreign exchange portfolio, buying long or selling foreign currencies short as their reading of the market dictates. Part of the net sales, they explained, came from the conversion of non-US currencies in overseas markets into US dollars. The bank is also involved in forward contracts for buying and selling of the currency, this publication was informed by someone close to the group.
Included in funds sold to the market in 2020 was the conversion of CAD$400 million that was sold into the system as US dollars.

Jamaica’s NIR jumps 50% in five years

Jamaica’s net international reserves (NIR) are at US$3.3 billion in March this year is now at the highest level since hitting a brief high of $3.67 billion in August 2017 has grown 50 percent since the start of January 2016 and 35 percent since the end of 2015.
During 2016, the NIR remained under US$2.6 billion up to November before reaching a high for the year of just over $2.7 billion and ended the year with an average of US$2.4 billion. The average for 2017 up to August was US$2.68 billion, with April with the highest of US$2.85 billion.
After peaking in August, the NIR fell back to US$3.1 in September and remained above the US$3 billion levels until October 2018, when it dipped briefly below and moved back above it in December of that year. It remained above $3 billion levels until June 2019 and dipped briefly below in July and August. In September, it moved back above it until April 2020. By September last year, the NIR slipped to US$2.75 billion and started to rebuilds reaching over US$3.1 billion in December, a month for healthy inflows and reduced demands. There was a slight slip below US$3 billion in January to US$2.98 billion, but by the end of February, it moved back above the US$3 billion levels before hitting a recent high of US$3.3 billion at the end of March.
The increased NIR comes against a dramatic fall in local interest rates, with the Treasury bill rates falling for 6 percent for 91 days instrument at the start of 2016, to just 1.94 percent in April this year. The latest increase in the NIR took place when tourism, one of the country’s major foreign exchange earners, was operating around a third of its capacity since the second half of 2020.

World Bank and CDB funds swell NIR

Net International Reserves surged 10 percent in March with a rise of US$303 to US$3.32 billion from US$3.016 billion at the end of February this year.
The buildup comes against a huge selloff of US dollars by dealers in the market between January and March, but the bulk of the increase did not come from normal inflows, information provided to this publication by Bank of Jamaica (BOJ) indicates. BOJ, in response to ICInsider.com enquiry as to the source for the increase, states “the growth of approximately US$303 million in the NIR for the month of March 2021 was mainly influenced by government-related receipts of approximately US$217 million; of which, US$175 million represented multilateral loan inflows from the World Bank and the CDB. The remainder of the inflows were received from authorised dealers and Cambios, under the Bank’s Surrender Arrangement.”
Estimated Reserves represents 53.65 weeks of Goods Imports and 38.71 weeks of Goods & Services Imports. At the end of December, the reserves were $3.13 billion but fell by $148 million in January to $2.98 billion and then increased by marginally to the close of February.