Bank: Currency inflows impacted

By DALE LUMA
FOREIGN currency inflows have been impacted by the onset of Covid-19, according to Kina Bank.
Responding in a statement to questions from The National, the bank said the speed with which the pandemic had spread had dramatically impacted global trade.
“Similar to every other economy in the world, Papua New Guinea hasn’t been immune from the slow-down in global trade,” the bank said.
“Companies and individuals are finding it increasingly difficult to access foreign currency.
“The US$500 million (K1.72bil) Sovereign Bond Issue in 2018 flowed steadily through the FX (foreign exchange) market in the first half of 2019, providing a real boost to foreign currency liquidity.
“That benefit eventually passed through.
“The economy was in an already difficult situation in fourth quarter of 2019, before the arrival of the Covid-19 this year.
“The Bank of PNG has been very responsive and intervened to provide US$130 million (K447.8mil) in the first three months of the year.
“A lot of that foreign currency liquidity was allocated specifically for medical equipment to combat the Covid-19.
“The retail, manufacturing, transport and petroleum sectors have also been given a high priority.” The Bank of PNG were also quick to put together a policy response for the Covid-19.
“They announced a series of measures, primarily on monetary policy and prudential standards to ensure PNG kina liquidity was made available to the banking system to help cushion the impact of Covid-19 on the economy.
“The Kina Facility Rate was lowered by a full two per cent to three per cent.
“The Cash Reserve Requirement (CRR), ie. the percentage of a bank’s deposits that must be held in reserve with the BPNG, was reduced from 10 per cent to seven per cent.
“This released approximately K800 million (K7.25bil) back into the financial system.
“The reduction in the CRR, along with a temporary relaxing of prudential measures allows the banks to assist customers that are going through difficult times by allowing grace periods on loans to businesses experiencing reduced cash flows and taking steps to manage their debt.
“At Kina Bank, we believe it’s our duty of care to support our customers through difficult times.
“We have passed on these rate reductions to our customers by reducing all local currency overdraft interest rates by the two per cent.
“We are the only bank to do this.
“We have re-priced our home loans to ensure that all existing owner-occupiers benefit from our 6.95 per cent variable rate, and investors our 7.95 per cent variable rate.
“This means some customers with existing home loans have been automatically transferred to a lower rate and are already saving thousands of kina.
“We’re also offering repayment holidays on a case-by-case basis to those customers who are feeling financial distress as a result of the Covid-19.”