No need to panic: BoJ addresses concerns about the dollar

The Bank of Jamaica building in downtown Kingston.

The central bank says since the start of the year the exchange rate has depreciated by 3.2 per cent, reversing the appreciation of 2.5 per cent, which occurred in December 2019.

The Bank of Jamaica (BoJ), in a statement, noted the concerns surrounding the recent movement in the exchange rate and the renewed expressions of concern by some participants about the pace of movement and the availability of foreign currency supply.

“Bank of Jamaica wishes to note that this recent movement in the exchange rate was related to an increase in demand, as supply conditions have remained normal,” the central bank said.

The BoJ said the increase in demand has been partially related to restocking activities by retailers. Additionally, it said the demand has increased in the context of financial institutions buying on behalf of their customers to fund real sector investments and planned portfolio-related transactions.

“Traders have also been buying on their own account since the start of the year to restore their foreign currency positions, having sold more foreign currency to the market than they bought in December 2019,” the bank said. The BoJ said these transactions are temporary in nature and that it expects the foreign exchange market to revert to more normal patterns in the near future.