Forex turns over in excess of K4bil: Bank

The amount of foreign exchange that was turned over last December was in excess of K4 billion, according to a recent report from Jonathan Prince of Westpac treasury.
This was the highest foreign currency inflows during last year with strong support from the Bank of PNG (BPNG)
The report said this allowed further substantial progress to be made in clearing outstanding foreign exchange orders, in line with PNG Treasury wishes for BPNG foreign exchange reserves to be deployed in this way.
“The October monthly economic review released by BPNG this month indicates foreign exchange reserves at US$2.238 billion (K7.4 billion), up from US$ 1.6667 billion (K5.5 billion) the previous month,” it said.
“The central bank estimates most orders are now served between one and two months.”
Reflecting this, the PNG Kina (PGK) has remained unchanged against the US dollar and strengthened against the Australian dollar by 4.5 per cent.
Over the course of the year the PGK has declined 4.1 per cent against the US dollar and appreciated 6.4 per cent against the Australian dollar.
Globally, asset markets have sold off sharply as the strong and synchronised global economic growth evident at the start of 2018 has given way to a far more uncertain outlook.
This is driven by several key risk areas including trade wars, Brexit and the Fed tightening cycle.
Despite the change in expectations for US interest rates, the US dollar has remained in the ascendancy as investors become increasingly nervous about the growing risks to global growth.
Westpac expects that continued robust growth in the US will encourage interest rate hikes in excess of what the market is currently pricing.
This, combined with uncertainty in the UK and Europe will continue to support US dollar strength.
Thus, further PGK gains against non-US dollar currencies are likely.
The Australian dollar closed around US$0.7200 (K2.9), however, further weakness is expected as a result of a stronger dollar and anticipated falls in key commodity prices.