The Bank of Jamaica. - File

The Bank of Jamaica (BoJ) has made an open-ended offer of another special instrument, a two-year variable rate Certificate of Deposit, Series D, which went on sale Wednesday.

The placement remains open "until further advised", the central bank said, adding that the offer to its dealers and commercial banks was part of its 'liquidity management' strategies.

It will continue to issue its regular 30 to 180-day CDs.

The BoJ, in the past few months, has been concerned about the high levels of Jamaican dollar liquidity in the market, some of which flows from returns on government debt issues, as well as redemption of principal investments that have matured.

Rate sheets

Rate sheets published by the Finance Ministry show that at least 11 coupon payments are pending this month alone on about $68 billion of domestic investment bonds at rates ranging from 11.55 per cent to 14.625, and two on a combined US$103.6 million of indexed bonds at 10.125 per cent.

Of the 11 coupons, one was due Wednesday, and another today.

Additionally, a $5.5 billion bond is to be redeemed July 27.

Alongside the BoJ, the Finance Ministry has announced five new debt issues this month - including two treasury bill auctions - between July 11 and 30.

The result has been sustained pressure on the local currency from brokers and investors, who have been chasing after U.S. currency with cash-filled purses.

With the demand for the U.S., the greenback has been gaining value while the local currency is in decline. The slide, however, has been contained by frequent interventions in the market by the central bank, whose rebalancing act involves selling U.S. dollars to its dealers for resale at an agreed price.

The currency which traded spot at $68.68 Wednesday has fallen 2.3 per cent year to date.

The last variable rate special instrument sold by the BoJ over four days in June had failed to excite the central bank's primary dealers, according to brokers, resulting in limited take-up.

This time, in a switch of tactics, the central bank has left the door open for waivering dealers to acquire the CD at their leisure.

The initial coupon is quoted at the current 3-month Treasury Bill rate of 11.98 per cent. Quarterly interest payments will subsequently be made at a 2-point premium on the prevailing 3-month T-Bill yield. The CD will be redeemed in two tranches - January and July 2009.

business@gleanerjm.com