Durrant Pate/Contributor 

Demand for Bank of Jamaica (BOJ) liquidity management instruments remained healthy, underscoring continued appetite for short-term Jamaican-dollar investments.

The 30-day Certificate of Deposit (CD) auction last week attracted J$24.27 billion in bids against an offer of J$22 billion for a 1.10x bid-to-cover ratio (1.04x in the previous auction). The higher subscription rate came as the BOJ cut the offer amount by J$1 billion (-4.35%). 

The weighted average yield on the 30-day CD auction rose slightly to 5.70%, from 5.47% in the previous week. The BOJ conducted a 14-day repurchase agreement (repo) auction, which received J$5.50 billion in eligible bids against an offer of J$3.0 billion. 

The auction’s weighted average yield increased by 2 basis points to 5.98%, suggesting participants demanded slightly higher returns for short-term liquidity. 

Treasury bills result

Finally, the Government of Jamaica (GOJ) recently announced a Treasury bill auction, comprising J$700 million each of the 91-day and 182-day tenors, for a total offer of J$1.4billion. The bills were settled with both tenors oversubscribed and fully allocated at average yields of 5.57% and 5.55% for the 91-day and 182-day Treasury bills, respectively. 

However, liquidity in the JMD money market, as measured by the aggregated current balances held by Deposit-Taking Institutions (DTIs), declined modestly last week. The total aggregate current balance amounted to J$75.66 billion last week compared to J$76.32billion the previous week. 

In the foreign exchange market…..The Jamaican dollar (JMD) appreciated by 0.1% against the USD, with the weighted average selling rate for US$1 decreasing to J$159.03.

End-user demand for USD remained subdued, as buyers may have delayed purchases ahead of the BOJ’s scheduled foreign exchange intervention yesterday and today, September 17 and 18. 

The planned intervention is expected to improve USD liquidity in the foreign exchange market, which could provide near-term support to the JMD.