Devaluation affects firm

By SHIRLEY MAULUDU
TRUKAI Industries Limited says the devaluation of the Kina has resulted in driving inflationary costs for the company.
Chief executive officer Greg Worthington-Eyre (pictured) made the statement on Tuesday.
SunRice chief executive officer Rob Gordon in a recent media report said “PNG was one of those uncertain and volatile factors”.
“A weak economy and devalued PNG currency (down almost 10pc against the Australian dollar since October 2015) has undermined SunRice’s traditional pricing power and attracted competition from Asian long grain rice exports,” he said.
“We continue to maintain a close watch on PNG issues, including the risk of sudden further Kina devaluations which would considerably reduce trading margins.” SunRice is Trukai’s major shareholder.
Worthington-Eyre said: “Trukai concurs with the statement made by Mr Rob Gordon in relation to currency devaluation. Ongoing access to currency is placing pressure on our business, as it is for many companies in PNG. For us it does make the cost of imports more expensive and is driving inflationary costs of doing business versus 12 months ago.
“Having said that, we believe the Bank of PNG is doing all it can to manage the currency rates and supporting Trukai.
“The rate of the fall being managed as it is, is minimising inflationary pressure in more recent times, albeit, inflation is a result of other factors also.”
In the recent quarterly economic bulletin, BPNG governor Loi Bakani noted that there had been some good inflows of foreign exchange in recent months,
“The good inflows have resulted in the relative stability of the kina exchange rate at US$0.3160 in June 2016 to US$0.3150 as at 30th December 2016,” Bakani said.
“Given the substantial depreciation of the kina exchange rate of around 37 percent since April 2012 to last December, the bank does not believe any further large depreciation of the kina would clear the foreign exchange market, but rather increase inflationary pressures.”