Kina value to impact prices
By DALE LUMA
EXPORTERS are going to benefit from a devaluation of the Kina but consumers will face an expected increase in prices of imported goods, according to the Bank South Pacific (BSP).
BSP chief executive officer Robin Fleming told The National that the Bank of PNG had been allowing the Kina to move down by between 10 bps (base points) to 20 bps per month.
It will see a downward adjustment of the Kina against the United States dollar (USD).
“This will benefit many of the exporters but will also have an impact on the price of goods and services that are imported for consumers,” Fleming said.
“The Bank of PNG is endeavoring to manage a gradual realignment of the value of the Kina against the USD while ensuring that the inflationary impact of the downward movements do not stifle business growth.”
The PNG Business Council this week suggested that the monetary policy makers should consider trading the Kina at the market value and also devaluing it to make the country’s export more price-competitive.
Council executive director Douveri Henao said they wanted the monetary policy makers and the Bank of PNG to consider the suggestion because of the current situation.
Micro Small Medium Enterprise council president Desmond Yaninen welcomed the idea but said it was not the right time.
“If it is done, it must be subject to preconditions,” Yaninen said on his social media page.
“Generally, PNG is a net importer. A weaker currency will hurt us.
“Without a corresponding increase in wages, cost of living will go up,” he said.
“The working class will be poorer, and any gains made by having a lower currency will be offset by higher prices of goods and services.”
15 comments
Marape Government needs to do something immediately because we are suffering badly due to the continuous devaluation of our kina .
Our total exports is almost twice less than total imports. Kina devaluation will only benefit mostly foreign owned manufacturing companies. Most or all will not increase wages or if they do, only few will benefit. The rest of the general populace will find ourselves inflation and the list goes on.
PNG import is greater than export and PNG is not manufacturing products that is having a competition in global market so we can compete through prices. they many import at higher price will have negative impact on individual household and the consequences will be worse with inflation.
There was talk on the reviewing the Act with the BPNG, which will increase inflation rate. – Des got a valid point.
Government should look into initiating industries’ and sell them to business men and women who wish to continue.
Consumers must switch to buying locally produced goods and services as cost saving alternatives. Substitute consumables like food stuff from the garden or make your own garden at the backyard and limit imported purchase. Save money for education and health.
Interesting arguments “for” and “against.” It is essential to thoroughly consider the pros and cons before making decisions in order to avoid the repercussions.
The government needs to exert real urgent effort into getting the pending resource extraction projects online and in operation in order to optimize forex reserves. BPNG is being forced to devalue the Kina simply because our foreign currency reserves are running low and may not be able to sustain international trade in the forseeable future. That is the only one sure bet to avoid catastrophy and a downward spiralling.economy. Covid-19 has only exacerbated the situation and many of the little people will surely feel the pinch of any sustaining or recovery measures that the government may institute to arrest the worsening economic situation. That is of course other than a concerted effort in getting out various stalled resource projects moving into full scale production within the next couple of years at best.
wrong move
At this juncture, kina devaluation, I am wondering as to how many years has PNG actually sustained any trade surpluses (yearly) on record? Let’s hope there is insight some robust export activities or investment streams recently realized. After all, the Covid- 19 pandemic has left many countries with contracting economies and soaring debt levels. Thanks lo yupla ol captain blo yumi…hope we see some light in this expansive PNG.
Prime minister James Marape must step down. Let some 1 competent people to run this nation. You are driving us into wrong direction. James Marape government is failing the people of Png and should immediately step down.
its not that possible to tell a person in authority to step down like this, you and I are the one that we supposed to think critically in such a crucial time because it brings opportunities of success. or think of better ways to control monetary policy of our nation which can benefit our country as a whole.
The devaluation will make exports cheaper but imports expensive. PNG mainly relies on imports and so this will badly affect all poor citizens to buy what they may want. The Government must apply best possible economic measures for the people to enjoy the outcomes. We (citizens) must now turn away from imports but depend on garden produces to sustain our living during this tough time.
You don’t ask him to step down, you contribute wishful ideas to run our lovely country, you did that to PO already, PO is struggling to rise up, because of you AM, we give him ample time fix the problem created by the Former PM.
Appreciation and depreciation are caused by the market forces of demand and supply of PNG Kina, while devaluation and revaluation of the currency are determined by the government. So this devaluation is to increase our Export so lets hope we get sufficient income through our exports and that may appreciate our currency again.
I support JI.A new Prime Minister will not do a miracle to rescue or change PNG as quickly as you dream in your imagination .As PNGans ,we need to play our part at all levels to save our country. As a simple man who had spent most of my time in the most remote least developed and marginalised communities, I would like to give a simple advice to our government advisors and the PM. Can the government gather ALL the ECONOMISTS both Abroad and within the country to sit down, brainstorm and get the best advise to rescue this sinking country just like Malaysia some years ago….Secondly Can the government BOOST Agriculture as this is our backbone past on from our ancestors …Encourage our young generation to cultivate the land and not FB on phones…..otherwise we are already into disaster…SOCIAL ISSUES … hundred of farmers and millions of consumers.
Strategies by simply cutting down Imports to 60% per annum. Stictly monitor and ensure Imports are only of the necessary. That way we kick out some of them Chinese who are truly draining the economy from the inside…
Only then we source avenues which can help us increase our export.
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