Jamaica’s Net International Reserves (NIR) remain strong, holding above US$6 billion for a second month, even as the Jamaican dollar continues to weaken against the US dollar. 

The Jamaican dollar closed the week at $161.52 to US$1, up from $156.42 at the start of the year. 

Speaking on Taking Stock with Kalilah Reynolds, Senior Trader at JMMB  Andre Reid said this movement has not sparked panic, but it has kept attention on the Bank of Jamaica’s (BOJ) role in managing the market.

He explained that most of the demand for US dollars is coming from importers of goods and services. 

The BOJ has stepped in to meet some of this demand, selling about US$730 million so far this year. That is almost 7% of total market trading volume. 

“Some people argue that the BOJ is too active, but if they stay out of the market, it could mean higher inflation because so much of what we use in Jamaica is imported,” Reid said.

The International Monetary Fund recommended that the BOJ allow the dollar to devalue more freely, but Reid believes the BOJ will keep intervening. 

He noted that inflation recently fell to about three percent, which is below the target range of four to six percent, and the central bank is likely to act to keep it down. 

“I don’t foresee the BOJ stepping back in a big way, not while inflation is already low and heading lower,” Reid noted.

Despite fears that heavy interventions could weaken the NIR, Jamaica’s reserves remain strong. Holding more than US$6 billion means the country has over 30 weeks of import cover, well above international standards. 

Reid said that the reserves act as “a last-ditch back pocket item” for times of crisis, such as global uncertainty or rising geopolitical tensions.

Looking ahead, Reid expects the exchange rate to stay in the 160s range for the rest of the year, with the BOJ ready to step in if needed. 

“I don’t foresee us going past $165 in the near term. The BOJ will use everything in its arsenal to defend against a slide to $200, which would mean a huge loss of purchasing power for Jamaicans,” he said.