Forex market Q3 inflow drops

FOREIGN exchange (FX) market inflows in the third quarter of 2023 fell by 16 per cent from the second quarter to K6 billion.
This is almost 18 per cent of FX inflows coming from Bank of PNG FX intervention, according to the Bank South Pacific Financial Group Ltd (BSP).
BSP general manager treasury Rohan George said according to BSP’s third quarter Pacific economic and market insights report, FX inflows in 2023 rose 19 per cent to K18.7 billion due to a 79 per cent year-on-year increase (K1.7 billion) in BPNG FX intervention. “BPNG has supplied 20 per cent (K3.8 billion) of PNG’s FX inflows this year.”
George noted that despite increased BPNG intervention, the FX market continued to miss Porgera’s FX contribution. During Q3, volumes from BSP’s top five FX inflow customers dropped by 30 per cent in August and 45 per cent in September. It resulted in outstanding FX orders hitting a record high in late September (K1.18 billion), which lengthened FX order execution times. George said BSP prioritised “national interest” orders over others, and trade and service orders over capital orders. The Kina mid-rate continued its gradual, orderly decline in Q3 falling by 2.5 per cent to 0.2730. It is expected to decline further by around 0.9 per cent per month or 10.8 per cent per annum.
“We expect continued flat trading conditions and potentially a larger than normal Central Bank FX intervention to reduce FX execution waiting times,” he said.
FX customers were encouraged to place orders early, with correct documentation to avoid any unwanted delays.