The Bank of Jamaica (BOJ) says the recent movement in the exchange rate was related to an increase in demand, as supply conditions have remained normal.
In a release yesterday, the Central Bank said it has noted the renewed expressions of concern by some about the pace of movement and the availability of foreign currency.
Since the start of the year the exchange rate has depreciated by 3.2%, reversing the appreciation of 2.5% that occurred last month.
However, the BOJ says so far this month the average daily inflows of foreign currency into the market has been approximately US$31 million which is greater than the average daily inflows for January 2019.
The Central Bank notes that the increase in demand is related, in part, to restocking activities by retailers.
In addition, the demand has increased in the context of financial institutions buying on behalf of their customers to fund real sector investments and planned portfolio-related transactions.
The BOJ says traders have also been buying on their own account since the start of the year to restore their foreign currency positions, having sold more foreign currency to the market than they bought in December.
It says it expects the foreign exchange market to revert to more normal patterns in the near future.
The Bank says it stands ready to take appropriate policy actions if the need arises.
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