Jamaicans and local businesses moved the equivalent of J$95 billion into US dollar accounts at a pace six times faster in 2025 than the year before, amid Hurricane Melissa uncertainty, according to the Bank of Jamaica’s (BOJ) 2025 annual report.
The BOJ attributed the acceleration to a combination of factors, including Jamaicans being cautious in hedging their bets in case of currency depreciation.
“The acceleration in the overall growth in customer deposits for the review year may be attributed to the combined effect of growth in nominal income in the economy in the context of remittance inflows, higher precautionary savings behaviour by households and corporates, as well as generally limited investment alternatives in the local money markets,” the report stated.
The Financial Gleaner did not get a response to queries up to print from the BOJ on whether reinsurance inflows also contributed to the rise. The Financial Services Commission indicated that reinsurance inflows grew by $78 billion in the December quarter, or 472 per cent higher year on year aimed at covering claims from clients affected by Hurricane Melissa.
The BOJ annual report stated that foreign currency deposits in the banking system grew by 13.4 per cent, or $94.9 billion, in 2025, compared with growth of 2.2 per cent, or $15.3 billion, in 2024, the report showed. By December 2025, nearly four of every 10 dollars of all private-sector deposits were held in foreign currency, the central bank said.
The passage of Hurricane Melissa on October 28, 2025 – a Category 5 storm the BOJ described as causing “widespread devastation to the capital stock across all sectors”–deepened existing anxieties about the economic outlook, prompting households and companies to park more savings in US dollars.
The BOJ, however, sees the growth as transitory and expects deposit growth to “moderate” in the near term “as reconstruction activity continues following the impact of Hurricane Melissa”.
Domestic currency deposits also grew, rising 12.3 per cent, or $158.7 billion, in 2025. But the faster growth in foreign currency holdings widened the dollarisation ratio.
During the year, the BOJ sold some US$1.2 billion into the foreign exchange market in 2025 through its B-FXITT intervention tool and a further US$57.0 million in direct sales to key entities as the central bank moved to contain excess volatility in the Jamaica dollar. The BOJ said it provided the funds to “attenuate episodic demand pressures” while also purchasing some US$2.2 billion from the system via surrenders from authorised dealers and cambios, making it a net buyer of US dollars for the year overall.
The hurricane altered that picture in the final quarter. Following the passage of Hurricane Melissa on October 28, 2025, the BOJ introduced what it described as “special pre-emptive measures to preserve relative stability in the foreign exchange market”, selling an additional US$250 million between November and December 2025 to absorb reconstruction-driven import demand. The central bank also directly supplied selected energy sector players with foreign exchange “to remove large purchases from the market” and reintroduced scheduled advance notices of intervention sales to assure the market of adequate liquidity. Despite the interventions, the Jamaica dollar depreciated 1.7 per cent on an annual average basis against the US dollar compared with 1.4 per cent in 2024.
business@gleanerjm.com
