Bank of Jamaica Governor Richard Byles has declared that the central bank will not alter its strategy of intervening in the foreign exchange market, even as the International Monetary Fund (IMF) has recommended a reduction in these activities. Governor Byles firmly believes that ongoing interventions are the most effective method for stabilizing Jamaica’s exchange rate and preventing erratic short-term volatility. This stance directly addresses the IMF’s recent Article Four Consultation findings, which advised the BOJ to lessen its direct buying and selling operations in the forex market and reduce the mandatory foreign currency surrender requirements imposed on cambios and commercial banks. Currently, cambios are required to surrender 15% of their foreign currency purchases, while commercial banks must submit 20%.
Governor Byles maintains that the current intervention policy has yielded positive results, contributing to a substantial increase in Jamaica’s net international reserves and fostering exchange rate stability. As of August 12, 2025, Jamaica’s gross international reserves reached a historic high of US$6.2 billion, an amount that represents 148% of the recognized adequacy benchmark. This significant reserve level is more than twice the international benchmark of 12 weeks of imports, providing a robust buffer against external shocks.
The IMF’s June 2025 recommendation suggested that a less interventionist approach by the BOJ would inject more foreign currency into the market, potentially lowering exchange rates and enhancing overall market efficiency. The fund argued that the BOJ’s market purchases could inadvertently drive up demand and prices, thereby reducing systemic efficiency. However, Governor Byles defended the BOJ’s active role, characterizing the Jamaican foreign exchange market as “too small and fragile” to be left entirely to market forces. He emphasized that the bank’s continuous engagement in the market allows it to build reserves that can be deployed strategically to counteract any perceived market irrationality.
BOJ’s Intervention Strategy and Rationale
The Bank of Jamaica employs the Bank of Jamaica Foreign Exchange Intervention Trading Tool (B-FXITT) as its primary mechanism for managing foreign currency transactions. Since its implementation in 2017, the central bank has injected approximately US$5 billion into the market through this tool. This consistent intervention has been critical in smoothing out significant short-term fluctuations in the exchange rate, thereby supporting the BOJ’s core mandate of controlling inflation.
Governor Byles further noted that this proactive strategy has not only stabilized the exchange rate but has also been effective in anchoring inflation expectations. Recent surveys reveal a noticeable decrease in the number of businesses that identify exchange rate depreciation as the primary factor influencing their future inflation outlook. Instead, changes in the prices of imported commodities, such as grains and oil, are now more frequently cited.
Net International Reserves Reaching Record Highs
Jamaica’s Net International Reserves (NIR) have demonstrated a strong upward trajectory. By the end of March 2025, the NIR had achieved a record US$5.79 billion, signifying a substantial 126% increase compared to the same period in March 2024. This growth is largely attributable to an expansion in total foreign assets, bolstered by significant increases in holdings of Securities and Special Drawing Rights (SDRs). The current NIR level provides a considerable cushion, equivalent to 30.7 weeks of goods and services imports, well exceeding the international benchmark of 12 weeks by more than 2.5 times. Earlier data from December 2024 also indicated a healthy NIR of US$5.58 billion, reflecting positive month-on-month and year-on-year growth.
IMF’s View on Market Deepening and Liberalization
The IMF’s assessment acknowledged Jamaica’s economic resilience, citing its effective inflation-targeting regime, robust international reserves, and a stable exchange rate. However, the Fund expressed that there is potential to further “deepen” the foreign exchange market by reducing surrender requirements and moderating the BOJ’s intervention levels. The IMF views such market liberalization as a vital step towards improving efficiency and strengthening monetary policy transmission. A surrender requirement mandates individuals or businesses to sell a specified percentage of their foreign currency earnings to the central bank.
Sustained Stability and Future Economic Management
Despite the IMF’s recommendations, Governor Byles remains steadfast in his commitment to the BOJ’s current interventionist policy. He is confident that this strategy, complemented by strong underlying economic fundamentals, has successfully normalized market expectations and maintained a stable exchange rate. In line with this approach, the BOJ’s Monetary Policy Committee recently decided to maintain the policy interest rate at 5.75% per annum, citing a stable inflation outlook. This decision underscores the central bank’s ongoing dedication to ensuring relative stability within the foreign exchange market and effectively managing inflation within its target parameters. The BOJ’s proactive measures are considered crucial for anchoring inflation expectations and bolstering overall macroeconomic stability in Jamaica.
The current news headline accurately reflects the Bank of Jamaica’s firm stance on this critical economic policy.