Effective 25 October 2017, Bank of Jamaica will reduce the amount that authorised dealers and cambios are required to sell to the central bank from their daily purchases of foreign exchange.

For both authorised dealers (ADs) and cambios, the amount required to be sold to the central bank will be reduced by 5.0 percentage points.

ADs and cambios currently sell 25% and 20% respectively, of their daily foreign exchange purchases to the central bank in what is called a “surrender” arrangement under the public-sector entity (PSE) facility. The reduction will result in the PSE facility surrender requirement falling to 20% and 15% for ADs and cambios.

Authorised Dealers and cambios also are required to sell 5% of their daily foreign exchange purchases to Bank of Jamaica in what is called the regular surrender requirement. This regular surrender requirement will remain unchanged at 5%.

The reduction in surrender requirements, in conjunction with the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT), is in keeping with Bank of Jamaica’s ongoing reform to make its interaction with the foreign exchange market more transparent, market-based and to improve the efficiency and transparency of the FX market.

The central bank expects a reduction in surrender requirements to improve liquidity conditions in the FX market and contribute to its deepening.

Going forward, the central bank will conduct periodic reviews of market conditions and other factors to determine the scope for further reductions in the surrender requirements, concurrently with further enhancements to B-FXITT. 

Source: Bank of Jamaica Press Release

October 24, 2017