FX jumped over 6 months in ’21

PAPUA New Guinea’s level of foreign exchange rose over a six-month period last year, a senior official says.
Bank of Papua New Guinea acting governor Benny Popoitai said this was mostly due to inflow of the World Bank budget support loan, liquefied natural gas (LNG) tax receipts and funds from donor agencies.
He said the level of foreign exchange reserves as of June 30 last year was US$2.49 billion (about K8.625 billion) and increased to US$2.6 billion (about K8.997 billion) as of Dec 7.
Popoitai said to support economic recovery, BPNG had maintained its accommodative monetary policy stance since the easing in March 2020.
The kina facility rate (KFR) and cash reserve requirement (CRR) remained at 3.0 per cent and 7.0 per cent, respectively.
He said the average daily kina exchange rate depreciated against all major currencies except the Japanese yen and the euro.
He said the kina had depreciated against the US dollar by 0.2 per cent to US$0.2850, 4.4 per cent to £0.2150 against the British pound and the Australian dollar by 3.2 per cent to AU$0.3999.
The kina, however, appreciated against the Japanese yen by 4.7 per cent to ¥32.36 and euro by 0.3 per cent to €0.2524. These currency movements resulted in the trade weighted index (TWI) declining by 1.4 per cent to 27.46 over the period.
“The level of gross foreign exchange reserves at the end of June 2021 was K8.586 billion, sufficient for 8.6 months of total and 16.2 months of non-mineral import covers.
“The Central Bank maintained a neutral monetary policy stance in the June quarter of 2021, keeping the KFR unchanged at three per cent.
This was to encourage private sector activity and support the economic recovery.
The repurchase agreement facility dealing margins were also maintained at 100 basis points on both sides of the KFR.”
He said BPNG had utilised its open market operation instruments in the conduct of monetary policy to manage liquidity.