Government assistance saw good last quarter for forex market

GOOD foreign exchange inflows and the Bank of PNG’s intervention of US$100 million (K323 million) under the Government’s 100-Day Plan assisted the foreign exchange market in the December quarter of 2017, says Governor Loi Bakai.
Bakani, pictured, said in the bank’s quarterly economic bulletin for September 2017, which was released yesterday, that inflows from the mining, petroleum, agriculture, forestry, manufacturing, retail and fisheries sectors were used to clear import orders in the spot foreign exchange market.
“Additionally, the crude oil purchase agreement between Puma Energy Ltd (Puma) and Oil Search Ltd (OSL), in which Puma would purchase 50 per cent of crude oil in kina from OSL, is expected to ease the burden on and contribute to the overall improvement in the foreign exchange market,” he said.
“These developments helped ease the demand pressure from the private sector and the bank to maintain a steady level of foreign reserves.”
Meanwhile, according to the economic bulletin, global economic growth strengthened in 2017, with stronger growth in the Euro area, Japan, United States (US) and Canada, and broad growth in the emerging Asian and European economies.
In the US, economic activity improved due to more business investments which were partly attributed to the recovery in the energy sector.
In Japan, economic growth continues to be supported by increased business spending, buoyant exports, and increased activity in tourism and trade.
In contrast, economic activity slowed down in the United Kingdom (UK) amidst uncertainties surrounding the Brexit arrangement.
In the emerging market economies, growth is driven by China, reflecting high domestic demand combined with improvement in global demand, while in other emerging market economies such as Brazil and other East Asian economies, higher external demand continued to drive growth.
In India, growth slowed as a result of the implementation of the goods and services tax (GST) and currency demonetisation initiative.
Based on these developments, the International Monetary Fund (IMF), in its October 2017 World Economic Outlook, raised its global growth forecast to 3.6 per cent from its earlier forecast of 3.5 per cent made in July 2017.