BOJ Has Enough Reserves to Maintain Stability in the Foreign Exchange Market

  • Speaking at the Bank of Jamaica’s (BOJ’s) quarterly press conference on August 21st, Governor Richard Byles assured that the bank has enough foreign currency reserves to satisfy demand by selling into the foreign exchange market. He indicated that in so doing, the BOJ can maintain the exchange rate at a relatively stable level.
  • Mr Byles noted that as at August 12 this year, Jamaica’s gross international reserves stood at a historically high and healthy level of US$6.2Bn, or 148% of the measure considered adequate.
  • Notwithstanding the healthy international reserves, the foreign exchange market recently experienced slightly higher-than-usual volatility. This volatility was attributed to temporary factors like global economic uncertainty, the Jamaican Dollar exchange rate breaching the $160.00 psychological threshold, and a narrowing of interest rate differentials1. As a result, the Jamaican dollar depreciated by 2.5% for the 6 months ending June (6M 2025), which was faster than the pace for 6M 2024.
  • Despite the volatility and depreciation, Governor Byles noted that the bank remains committed to a flexible exchange rate regime. “…supported by strong economic fundamentals and BOJ’s intervention to smooth out the volatility in the foreign exchange market, expectations have normalised. Since the end of June, the pace of depreciation has fallen and there has been a reduction in the market’s net open position,” Mr. Byles noted.
  • Over the 12 months to July 2025, the BOJ sold US$1.2Bn through its B-FXITT facility, compared to US$956Mn in the previous year, while net purchases totalled approximately US$931Mn.

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1Interest rate differentials refer to the gap between domestic market interest rates and those in external markets

(Source: JIS)