Starting next month, Jamaicans will know how much foreign currency the Bank of Jamaica plans to sell to the market, and when. It’s a policy the Central Bank will begin to help keep the value of the local dollar stable.
In an exclusive interview with Nationwide News, the BOJ Governor Brian Wynter, says he believes this will ease fears there’s not enough foreign exchange available.
For the past three days, the dollar has strengthened to be under 130 to 1 US. The local currency sold today at an average of $129.77 cents; after more than three weeks above the 130 mark.
It’s been fluctuating since last October, when the BOJ intervened in the market. But in May, Governor Wynter says people felt a sudden need to buy US dollars as the exchange rate ticked upwards, causing it to remain above 130.
But Mr. Wynter says there’s no need to worry. He says Jamaica has had more foreign exchange than it needs for more than two years now.
Part of the system the BOJ is planning to ease the anxiety is to auction off foreign currency once a week to financial institutions.
There’ll also be rules to prevent one institution from hoarding all the foreign currency. Mr. Wynter says no one will be able to win more than 20-percent of the dollars they’re selling, so there will be multiple winners.
All registered institutions will also have to participate in the auction every week, even if they don’t want US dollars at that time.
This is to prompt them to offer a low price when US dollars aren’t in high demand. This is expected to bring the exchange rate down and make it cheaper for YOU to get foreign currency at the bank or a cambio.
The other thing about this new system that will positively impact the exchange rate, is its predictability.
The Governor is careful to note that this is not the system of the 1980s, when auctions were used as a means of currency control.
Rather, he says this is a way of modernizing the way the BOJ sells foreign currency to the market. The new system is still being fine-tuned.
But Mr. Wynter says he hopes to make an announcement by the end of this month. And the auctions could start around mid-July.