The FX market continued to show moderate liquidity week over week with a slight depreciation of $J (0.05%) to satisfy the requests for end-users and institutional clients.

There was no B-FXITT intervention from the Bank of Jamaica (BOJ) for this week.

Week over week, USD demand was comparatively slow with the anticipation that this will continue for the remainder of the year.

We also expect the market to remain quiet for the remainder of the year with the disruptions expected based on long weekends around the holiday season.

For the week beginning December 12, 2022, we expect the JMD to lose momentum as businesses focus on setting payroll and bonus payments.

For this week we continued to see a rally in prices of risk assets including the emerging market bonds following the release of the job market results in the prior week. Results printed stronger than expected.

Shorter dated bond prices remained relatively flat for the week with the exception of longer dated bonds.

Bond prices saw increases of 1.50% and 3.15% for JAMAN 45 and JAMAN 39 respectively, while the 25’s and 36 on average remained stable week over week.

With the anticipation of a softer policy rate hike this week from the U.S Fed, we expect prices to continue on their upward trend barring any deviation from expectations.

Following the CPI information that was released early this week, with consumer price index coming out just 0.1% higher than the previous month, we expect to see a boost in the market as the economy begins to loosen up.

Interest rates on the short term overnight rates (< 30 days) remain on a downward trend with a range of 7.5% - 8.25% on the lower end, a slight downtick compared to the previous week.

The JMD market showed a slight increase in liquidity for the period. The market saw a reduction in demand for JMD for shorter term funds while the longer term funds remained stable.

The rates on longer tenures decreased slightly ranging from 8.75% - 8.90%.

The BOJ 7.50% Fixed Rate 30-day Certificate of Deposit auction for the allocation of J$19.5B was oversubscribed, with total value received amounting to J$25.4B. The average yield for successful bids was 9.08%, with highest submitted bid rate of 12.00% and lowest of 7.75%.

Week over week, USD rates remained relatively flat with sufficient liquidity with rates ranging between 3.75% - 4.25% for shorter tenures with longer tenures seeing rates between 3.85% - 4.40%.

For the week starting December 12, 2022, the expectation is that both the JMD & USD liquidity will remain moderate while the market awaits information surrounding the FED decision this week.