Demand for Bank of Jamaica (BOJ) liquidity-management instruments strengthened last week with the auction of a 30-day Certificate of Deposit (CD) attracting J$33.10 billion bids against an offer of J$24.00 billion, producing a 1.38x bid-to-cover ratio.

This is up from 1.29x in the previous auction. The offer amount increased by J$2.00 billion (+9.1%), while the average yield on successful bids rose to 6.22% from 5.91%. The BOJ also increased its provision of short-term Jamaican-dollar liquidity through its 14-day repurchase operation.

Eligible bids totalled J$4.50 billion against an offer of J$3.00 billion. Yields on BOJ liquidity management instruments are expected to rise in line with the BOJ’s higher policy rate, which should further strengthen demand for these instruments as investors seek more attractive short-term returns.

Money market liquidity declined 9.4%

Money market liquidity, as measured by the aggregate current account balances held by deposit-taking institutions (DTIs), declined by 9.4% last week to J$66.18 billion from J$73.02 billion in the previous week.

In the foreign exchange market, the Jamaican dollar appreciated by 0.06%, with the USD selling rate moving from J$159.46 to J$159.37 last week.

The appreciation reflected improved USD supplies, supported by the BOJ’s US$30 million intervention at a rate of J$158.14, which helped meet the existing demand for US dollars.