Forex sees slow recovery

Business

By MARK HAIHUIE
THE foreign exchange shortage situation has improved since last year but will take a longer period to normalise, Lae Chamber of Commerce Inc president Alan McLay says.
McLay told The National that this was due to an increase in commodity prices which allowed for an easing of restriction on foreign exchange orders by businesses.
“Regarding the foreign exchange shortage, there has been an easing of the restrictions that had just about crippled businesses last year,” he said.
“This is due to most commodity prices picking up, which has meant that more foreign currency is available.
“Having said this, because there is still such a backlog of orders for foreign exchange from companies needing to pay for previous orders, and to buy and pay for new stocks, it will take a long time to fully recover.
“It should be noted that many companies no longer enjoy the good standing with suppliers that they had built up over the years.”
Bank of South Pacific chief executive Robin Fleming had said earlier the year would be difficult in terms of the foreign exchange market.
He said meeting demand was dependent on fluctuations on the level of exports and imports.
“I think this year will be a more difficult year but I am sure there will be some additional flows that haven’t necessarily been budgeted for,” Fleming said.
“We have 40 per cent share of the foreign exchange market. The foreign exchange is very much flow-driven with a handful of exporters and a large number of importers. And when we get some of the larger flows come in, we are able to reduce the number of orders quite considerably. It may well build up over time.”