January 4, 2018

PNG Kina continues to depreciate against US dollar

The Papua New Guinea  kina has depreciated against the United States dollar by 16 per cent since 2014, says International Monetary Fund executive director Heenam Choi in a statement.
This depreciation stabilised in 2016 and the issuance of three-year bonds to counter this is being considered, Choi said.
“The currency has depreciated by 16 per cent in nominal terms since mid-2014 but since May 2016 the currency has been stable against the US dollar.” he said.
“Central Bank’s intervention has also been limited and gross foreign reserves were US$1.7 billion (K5.7 billion) as of mid-October 2017.
“International multilateral agencies have indicated commitment to provide concessional financing, and the authorities intend to issue a three-year bond to finance structural reforms with some financing used to mitigate the foreign exchange imbalances.”
An International Monetary Fund staff report recommended a gradual adjustment to the exchange rate by the Bank of PNG.
“A move towards greater exchange rate flexibility and elimination of overvaluation of the kina should go hand-in-hand with the adoption of a credible fiscal consolidation plan and medium-term fiscal strategy.” The National/ONE PNG