BOJ Announces Adjustment in the Foreign Currency Net Open Position Limits

• Bank of Jamaica announced that, effective 1 July 2020, the limit on the foreign currency net (FXNOP) of authorised dealers will be as follows: the limit will remain at 25% of regulatory capital denominated in Jamaica Dollars, for short positions. As it relates to long positions, the limit will be reduced by 10 percentage points to 15% of regulatory capital denominated in Jamaica Dollars.
• The FXNOP limit is calibrated to ensure adequate levels of liquidity in the foreign currency market. The decision to adjust the limit is based on the prevailing market conditions as well as Bank of Jamaica’s commitment to conducting periodic reviews of the limit since its introduction in 2018. All other guidelines relating to the FXNOP limit remain unchanged.
• The Bank will continue to monitor the implications of financial market developments and will appropriately adjust FXNOP limits in accordance with the Bank’s objective of maintaining financial system stability.

(Source: BOJ)