Foreign currency trades back to normal: BPNG

 TRADING of foreign currency has returned to normal following interventions by Bank of Papua New Guinea, Governor Loi Bakani says.

He said BPNG had established a clear understanding with foreign exchange dealers, mainly banks, in respect to the role of official exchange rate set in the interbank market, and the margins they could expect above and below it.

However, there was a lack of supply of foreign exchange coming in, he said.

“As it is at the moment, our interventions in the foreign exchange market has been very limited because we want to maintain some confidence in the economy, confidence in management of our foreign exchange reserves by maintaining a level of reserves of US$2 billion (K5.6 billion),” Bakani said.

“Still the problem is a structural issue where we don’t have a supply of foreign exchange coming in. There is so much Kina here, the liquidity is here but it cannot be translated or it cannot be exchanged into foreign exchange or dollars, the foreign currency, there is a mis-match between the supply, which is much lower and the demand which is still very high. 

“We see this (shortage of foreign currency supply) as a short term and we hope that and are discussing with commercial banks, we have an understanding that, we will have to deal with the situation on the short term and we’re looking at how we will resolve this, clear the backlog of orders in the foreign exchange market or in the interbank market is here and then we can start on a better footing in the coming months.”

Bakani said the BPNG had been in discussions with some of the companies that have backlogs of overdue payments to their overseas service providers.

“We’ve (BPNG) met with a lot of big importers to discuss ways we can address their import demand requirements.

“And this is ongoing, especially the bigger players like Trukai, Puma, Digicel. 

“Those are the big players that we have very direct discussions with.”