The Resilience of the Jamaican Foreign Exchange Market
- A dispassionate assessment of Jamaica’s foreign exchange (FX) market at this time, in the context of a global pandemic, tells a story of both bad and good news.
- The major bad news is that as a direct result of the COVID-19 pandemic, tourism inflows, Jamaica’s biggest sources of foreign exchange earnings, remain practically at a standstill.
- BOJ’s current estimates of the value of the drastic fallout in FX inflows for the 2020/21FY in a best-case scenario is US$800Mn, and in a worst-case scenario is US$1.40Bn.
- In contrast, the good news is that in several ways, including but not limited to direct sales intervention, BOJ has, since March this year, acted decisively to implement an assortment of measures, all designed to supply extra FX liquidity to the financial system, even though the system is not short of FX liquidity.
- The health of the financial system, the robust level of remittance inflows, the vigorous volumes present in the market, and the strength of BOJ’s foreign reserves, all combine to indicate clearly that the economy at this time has more than enough FX at its disposal to safely navigate the rough waters of this crisis.