Foreign exchange market turnover up by 17 per cent

The National Business

THE foreign exchange (FX) turnover growth was driven by the increased Bank of PNG (BPNG) interventions and higher receipts from commodity exports.
The 2022 BSP Quarter 4 Pacific Economic and Market Insights Report says the foreign exchange (FX) market turnover for 2022 increased by 17.3 per cent compared to the prior year.
Bank South Pacific (BSP) group general manager for treasury, Rohan George, said: “FX turnover in 2022 was supported by strong commodity prices, in particular oil, copper, palm oil and
coffee.
“These firmer commodity prices assisted to offset the lost FX inflows from the closure of the Porgera gold mine.
“BPNG intervention in the FX market in the December quarter 2022 rose 51 per cent compared to the September quarter.
“Outstanding FX orders with BSP fell by 70 per cent in the past quarter, with large end of year FX inflows and Central Bank interventions more than offsetting large crude oil imports and pre-Christmas stocking.” George said that the Kina mid-rate was stable against the US dollar (USD) at 0.2840.
The stability against the USD allowed the PGK to finish stronger against major currencies, due to the cross currency effect of the strong USD.
The PGK finished the year 6.8 per cent stronger against the Australian dollar (AUD).
George explained that “recessionary fears amid a tightening of monetary policy in Australia and widening unfavourable interest rate differentials, weakened the AUD early in the 2022 December quarter before rebounding at years end to remain broadly unchanged over the quarter.”
On BSP’s near-term outlook for the PNG FX market, he said: “After strong FX inflows in the December quarter, we expect post-Christmas import orders to increase in January and February, with FX inflows gaining momentum into the end of March.
“To manage volatility in foreign currency flows, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash backed whilst awaiting execution, tax clearance certificates are current and reflect the expected FX order execution time.”