Exec says Kina not going up

The National Business

By PETER ESILA and CLARISSA MOI
IN light of the recent coronavirus pandemic, the Australian dollar has depreciated significantly against the PNG Kina making it stronger, Bank South Pacific chief executive Robin Fleming says.
“PNG Kina moves against a basket of currencies that has a heavy weighting to the US dollar in which currency a large number of PNG exports are traded,” Fleming said.
“The Kina has depreciated marginally against the US dollar this year whereas other currencies that are far more actively traded such as the Australian dollar have depreciated far more rapidly than the PNG Kina.
“The Australian dollar is at a 10-year low against the US dollar and, as a result, the Kina has become stronger than the Australian dollar.
“This is due to the Australian dollar depreciating against the US dollar rather than the Kina getting stronger.
“In some ways, this is accelerating the demand for Australian dollars by importers as the exchange rate is favourable for those importers.” Fleming further noted that supply of foreign exchange had not improved and export at this stage was marginally lower than last year.
On State Enterprises Minister Sasindran Muthuvel’s call on the Bank of PNG to create a facility for banks to access liquidity, Fleming said the Bank of PNG was providing intervention monthly to provide liquidity for a number of the country’s importers – most recently, on Friday.
“All businesses have asked the Government to consider additional foreign exchange as part of any stimulus support associated with a Covid-19 response,” he said.
“There has been a meeting with the Treasurer and business council heads late last week and it is expected that bank chief executive officers will have further meetings early this week to discuss and agree on measures that will ensure domestic liquidity does not impede and support or stimulus plans that the Government introduces.
Fleming said domestic liquidity was sufficient for normal market conditions but given the Covid-19 crisis, additional liquidity was vital.