By SHIRLEY MAULUDU
DEALERS began experiencing the shortage of foreign exchange when the Bank of PNG introduced a trading band on margins two years ago, it has been revealed.
Moni Plus managing director David Kelso, when asked how the company was faring in regards to the shortage of foreign exchange in the market, said dealers had been affected in the past two years.
“Foreign exchange shortages have been affecting all dealers for almost two years now since the BPNG placed a trading band on margins,” Kelso told The National yesterday.
In June 2014, BPNG said in a statement that as the regulator of the banking system, it realised there was a market failure in the trade and transacting of foreign currency.
Effective from June 4, 2014, BPNG said an exchange rate trading band of 150 basis points – 75 basis points above and 75 basis points below the official (inter-bank) rate – is set within which an authorised foreign exchange dealer can trade currency.
This change should not in any way affect the smooth functioning of the foreign exchange authorised dealers, the banks, financial institutions and money changers dealing with foreign currency.
“The trading band has no reflection on the stability of the banking system and the Central Bank’s capacity to serve the foreign currency needs of the country,” Kelso said.
“We still maintain a floating exchange rate regime where the inter-bank rate is determined by the supply and demand for foreign currency in the market.”
But Kelso yesterday said it had been otherwise for Moni Plus as a foreign exchange dealer.
“Shortages of foreign currency makes it difficult to operate and to serve our clients’ needs,” he said.
“It is also causing a build-up of supplier orders which is making it difficult for importers to manage inventories and future demand.”
“This is a problem for the whole nation.
“We need to export more to give us more hard currency.
“Our commodity prices have to increase to give more volume. So higher commodity prices will lead to more exports.
“That’s what we need and it is important.”
By SHIRLEY MAULUDU