TO: ALL AUTHORISED DEALERS
RE: Re-Introduction of absolute limits on the Foreign Currency Net Open Positions
Bank of Jamaica hereby advises that, effective 6 December 2021, the limit on the foreign currency net open positions (FXNOP) of authorised dealers will be adjusted as follows:
- For short positions, the limit will be 25 per cent of regulatory capital denominated in Jamaica Dollars, or JMD 7.0 billion, whichever is lower.
- For long positions, the limit will be 15 per cent of regulatory capital denominated in Jamaica Dollars, or JMD 4.5 billion, whichever is lower.
These adjustments will remain in effect until further advised.
The FXNOP limit is calibrated to address the behaviour of market participants in the foreign exchange market, particularly market cornering, while ensuring the provision of adequate liquidity in the foreign exchange market. The decision to re-impose absolute limits is consistent with the Bank’s commitment to conduct periodic reviews of the limit since its introduction in 2018. All other guidelines relating to the FXNOP limit remain unchanged.
Bank of Jamaica will continue to review and appropriately adjust FXNOP limits as is necessary in accordance with its objective of maintaining orderly conditions in the financial markets.
