interest rates also continued to decline in the quarter. the weighted average yield on the 1 - month, 3 - month and 6 - month treasury bills declined by 78 basis points, 35 basis points and 51 basis points, respectively to 7. 48 per cent, 7. 40 per cent and 7. 48 per cent at the auctions in the december 2010. yields have continued to decline falling by an average of 2 basis points at the auctions in january, with all tenors significantly oversubscribed. the external community has also continued to demonstrate its confidence in jamaica ’ s creditworthiness. average yields on jamaican sovereign bonds have fallen from about 10. 50 per cent at the end of january last year – just before the implementation of the jamaica voluntary debt exchange ( jdx ) – to 7. 57 per cent at the end of january this year. bis central bankers ’ speeches this occurred in the context of a fall of about 2 percentage points in the average spread between jamaican sovereign bonds and us treasury bonds – an indication that investors perceive a meaningful reduction in the risks associated with investing in jamaican securities. when compared with other emerging markets, jamaica ’ s bonds have also performed well. the spread between jamaican sovereign bonds and the benchmark emerging market bond index ( known as the embi ) fell by more than 3 percentage points over the course of 2010. also reflective of the increasing confidence about the near - term prospects for the economy, the foreign exchange market was relatively stable for the december quarter. in this context, there was a marginal appreciation of 0. 45 per cent in the weighted average selling rate of the jamaica dollar for the review period. this was in comparison to average depreciation of 3. 0 per cent for the last five december quarters. for the calendar year 2010, the value of the jamaica dollar appreciated by 4. 4 per cent against the us dollar. this was in contrast to the depreciation of 10. 2 per cent in 2009. the appreciation in the value of the domestic currency in the quarter was associated with increased net private capital inflows which were more than sufficient to offset the impact of increased demand to satisfy payments for current account transactions. in the context of this excess supply of foreign currency in the market, the bank made net purchases of us $ 51. 9 million during the quarter. these purchases along with the purchase from government of the proceeds of a us $ 200. 0 million loan from the inter - american development bank, contributed to an increase of us $ 197

was temporary. in this regard, the bank is projecting that there will be a moderation in inflation in the march 2011 quarter, within the range of 1. 0 per cent to 2. 0 per cent. the projected deceleration in inflation in the march quarter is largely predicated on the expected price reversals for agriculture crops which occurred in the december quarter. in addition, we are expecting continued stable domestic capacity and declining inflation expectations to have a moderating impact on inflation. however, the bank is projecting continued increases in international commodity prices, which should be the major influence on inflation in the quarter. real sector the bank estimates indicate that real gdp contracted in the range of 0. 0 per cent to 1. 0 per cent for the december quarter, similar to the contraction in the september quarter. similar to our forecast in november 2010, all industries are estimated to have contracted with the exception of mining & quarrying and hotels & restaurants. underlying aggregate demand is estimated to have remained weak due mainly to continued declines in consumption and investment. for the march 2011 quarter, the bank is projecting that there will be marginal growth in economic activity. this will be largely driven by continued expansion in mining & quarrying and hotels & restaurants as well as growth in electricity & water supply. the strength of the expansion in these sectors is expected to offset the slower rate of decline in the other sectors. outlook the consensus is that the global economy grew at a faster rate in 2010 than was previously expected, led by emerging economies such as china and india. although the prospects for global growth in 2011 have also improved, this is expected to be at a slower rate than in 2010. this expectation of slower growth is in the context of monetary tightening being undertaken by some emerging economies. nonetheless, the forecast for continued growth in the world economy, particularly the usa, bodes well for remittance inflows and tourist arrivals to jamaica. in spite of the improvements in the global economy and the expected marginal growth in the march quarter, the jamaican economy is projected to contract in the range of 0. 0 per cent to 1. 0 per cent for fy 2010 / 11. the projected contraction is a direct result of the declines that were experienced in the first three quarters. however, we are expecting that growth in the march quarter will continue into the next fiscal year with all sectors being projected to register expansion. given the forecast for the march quarter, the bank is expecting inflation for fy 2010 / 11 to fall within our original