Devaluing kina might solve forex issue: Researcher

By MARK HAIHUIE
DEVALUING the Kina should see an increase of foreign exchange supply says Australian National University Development Policy Centre research officer Rohan Fox.
He told The National that agricultural exporters and rural farmer would also earn more if the current currency rate is adjusted to about K4 for US$1.
“At the moment the exchange rate or currency value with the US is around US$1 for around K3. And officially, to transfer money overseas, or bring in overseas money, everyone has to transfer at this one rate,” Fox said.
“At the current rate there are not enough people willing to buy Kina, but many people who want foreign exchange, so what results is a shortage in foreign exchange.
“To get more foreign exchange, we think it would be better to value the Kina a bit closer to US$1 for K4.”
He said the International Monetary Fund had also noted that about K250 million extra would be earned per year if the currency value was adjusted to that rate.
“At this Kina level coffee, oil palm and cocoa growers would also get more Kina for the same crop as their crops are paid for in foreign currency, and local PNG businesses would be in a better position to compete with foreign imports”.
He said those who would be disadvantaged by any devaluation are businesses and consumers
who need to buy foreign imported products and people and organisations who have foreign debts to pay.