Jamaicans’ appetite to invest in US currency has driven the Bank of Jamaica (BOJ) to increase its holdings on the foreign currency deposits of financial institutions, thus creating a disincentive for the banks to take deposits in any other currency but the Jamaican dollar.
The BOJ adjustment means that individuals seeking to hedge against the sliding local currency by saving in foreign currencies will — effective march 2017 — no longer see the returns they were once offered by the banks on deposits prior to October last year.
“That appetite to buy US dollars pretty much by everybody meant that they’ve got dollars sitting in bank accounts and there is nothing much that people can do with it because there is not a lot of demand for the dollar. The current account deficit in Jamaica has narrowed so much that when you take account of the imports…we actually have more foreign exchange coming in than people want,” Governor Brian Wynter stated during a quarterly press briefing yesterday.
