Forex unaffected by price hike

The National,Thursday June 16th, 2016

NEWCREST says the recent hike in gold prices may have less impact in ameliorating the foreign exchange issue which the economy is facing.
A company spokesperson was responding to queries from The National regarding Newcrest’s view on how the improved gold price per ounce could help ease the forex burden.
“There are a range of factors influencing the foreign exchange liquidity and the recent increase in the gold price is likely to have a lesser impact than other factors,” the spokesperson said.
“Generally when the gold price is higher, gold producers will improve their profit margins and potentially pay more royalties and tax to the Government, although the tax payments in particular are influenced by a range of other factors including their respective tax/financial positions, operating costs, historic and ongoing capital expenditure, and foreign exchange rates and so on.”
A government source said while the global economic scenario remained highly uncertain, and commodity prices generally low, there had been some positive development in the country’s overall economic outlook. “The gold prices have recovered very well, greatly improving the prospects for significant profits by our major gold miners.”
The source said this in turn would provide higher tax revenues to the Government.
“In addition, there has been a significant increase in crude oil prices, which have risen to US$48 ( a barrel,” the source said. “There is some optimism that the price will exceed US$50 in the third quarter and rise a little more in the fourth quarter, which could also benefit PNG revenues. The Department of Treasury is keeping a close watch on these trends and will be in a good position to respond to any Government directives on management of the 2016 budget.”