No link between liquidity and devaluation: Reserve Bank of Fiji

Reserve Bank of Fiji (RBF) Governor Ariff Ali has clarified that there is no link between liquidity and devaluation, and neither are they connected to one another.

Ali said currently the RBF has over $2billion (US$1 billion) in foreign reserves.

He said the International Monetary Fund’s benchmark is three months of import cover which equates to close to $1.5billion (US$701 million).

The Governor says this means the RBF has around $1billion (US$500 million) additional reserve than what the IMF benchmark is.

He said there is no need to devalue the Fijian dollar.

“The level of liquidity is something that we influence or we manage and we decide whether it should be high or low. With regards to devaluation our foreign reserves as of today would be just below two billion dollars. We also have somewhere around $530m (US$427 million) sitting with other institutions like the FNPF, some of the large cooperation because they are able to hold foreign currency. So the combined total of all our foreign reserves is $2.5billion (US$1.1 billion).”

The Governor also clarified that RBF manages liquidity on a daily basis and currently it stands at around $300 million (US$150 million).

He also said there is no cash crisis in the country.

“We have in our vault enough money that will meet the demands for the next five years or even more, so there is no cash crisis. I see a lot of social media talking about the cash crisis. We have got more than enough cash in our stock to meet the demands of the public or the economy for the next five years or even more.”

He said if they feel there is not enough liquidity, they could then withdraw money from the system to set it right.

SOURCE: FBC NEWS/PACNEWS