BREAKING: @CentralBankJA has issued a statement on the state of the FX market.

It’s actually a relatively easy read, as far as central bank releases go.

Read it here - http://www.boj.org.jm/uploads/news/boj_statement_on_the_fx_market_final.pdf

I highlight a few things below.

#FinanceTwitterJA

//Mini Thread

BOJ’s current estimate of the ‘drastic fallout in FX inflows for FY 20/21’ is expected to be between US$800M - US$1.4B.

BOJ has taken many measures to counteract these effects including (but not limited to) selling US$256M directly to JPS & Petrojam.

BOJ has provided US$700M in FX liquidity to support the financial system, which US$78M has already been repaid.

Ie they have injected US$700M in cash, in various forms, into the financial system and have already gotten back US$78M.

Remittances globally are forecast to drop ~20% in 2020, but since May 2020 remittances to Jamaica have INCREASED.

15.7% increase in May.

41.6% increase in June.

This blows my mind on many levels. The biggest being that unemployment in the US has ballooned...

and that unemployment has hit minority communities disproportionately harder than the rest of the labour force. Aka Jamaicans are likely hit hardest by unemployment, yet on a whole the diaspora has increased remittances.

They also spoke the results of their last flash auction, which I discussed in detail in my thread almost 2 weeks ago. https://twitter.com/marcgayle/status/1301280032657203207

They are also reminding the public and all market participants that the FX market is currently doing what it is supposed to be doing — ie fluctuate in both directions.

While we saw depreciation before, we are seeing appreciation now.

This is how it is supposed to work.

BOJ has US$3.7B in gross reserves that they plan to manage judiciously to help steer us through this temporary crisis.

They are cautioning against panic & complacency.

There is no shortage of FX and as a result of the health of the financial system, strong remittances...

vigorous market activity (ie banks & cambios buying and selling amongst each other) & the strength of BOJ’s foreign reserves all combine to indicate clearly that the economy has more than enough FX to safely navigate thru this crisis.

This release is quite reassuring, IMHO.