Nov 2016 Financial News

Forex in oversupply - GraceKennedy

Nov 25, 2016

Forex Traders, a subsidiary of GraceKennedy Ltd, is running a sale on US dollars which is set to last until December 31.

President and CEO of GK Don Wehby told the Jamaica Observer on Wednesday that the move is intended to “address the surplus of US dollars in the market.”

The comment is the third indicator that there is indeed more than adequate funds to meet market needs at this time. The first was the slight appreciation of the Jamaican dollar against its US dollar counterpart starting in late October.

On Tuesday, November 22, the dollar traded for $129.09 to one US dollar, up from October 25 when it traded at a high of $129.21 to the dollar.

The other indicator was comments made by the Bank of Jamaica (BOJ) which sells currency into the market when needed. Last week, at its quarterly monetary policy report, BOJ Governor Brian Wynter said supplies were adequate, warning portfolio managers of the possibility of continued currency appreciation.

In order to address the excess, Wehby outlined that GraceKennedy Currency Trading Services Ltd, operating as FX Trader, has offered an incentive to encourage take-up of the excess US dollar cash.

This incentive will run through to December 31, 2016, depending on continued availability.

The group head said that demand from small buyers of currency is also usually high at this time of year, so FX Trader is making a marketing push.

“Demand for US dollars at this time of the year is usually high, so consumers will find the availability of cash and our incentive to be quite helpful. And by consumers we are referring primarily to individuals and a few smaller retail commercial entities that buy cash,” he outlined.

The offer allows consumers buying between US$300 and US$499 to receive an incentive of 50 cents off the board rate; purchases of US$500 to US$999 will have an 80 cent incentive; while US$1,000 will have an incentive of $1.50 off the board rate, Wehby said.

“Hence, customers purchasing US$1,000 in cash or more, from any FX Trader location islandwide, will get the incentive price of $126.25 for US$1.00. The board rate is subjected to change in keeping with the market conditions,” the CEO added.

The CEO did not address questions from Caribbean Business Report about source of funds and third-party purchases made from other local cambios, which for over a year now have been unable to bank excess funds with local commercial banks, which are themselves on a de-risking streak.

The cambio sector has more than 60 traders who are estimated to supply some US$3 billion to the market annually.

Source:
Avia Collinder
Jamaica Observer
Friday November 25, 2016    

http://www.jamaicaobserver.com/business/Forex-in-oversupply---GraceKennedy_81437