Local liquidity strong: Fleming

The National Business

By CLARISSA MOI
DOMESTIC liquidity in the country currently sits at around K1.2 billion, a contraction from K1.9 billion in late July, according to Bank South Pacific group chief executive Robin Fleming.
Responding to questions from The National on the factors of this contraction, Fleming said that the foreign exchange intervention by the Bank of Papua New Guinea (BPNG) had been the primary driver of reduced domestic liquidity.
“Notwithstanding the reduction in liquidity due to the Bank of PNG intervention, the overall system liquidity remains strong with current domestic liquidity being around K1.2 billion,” he said.
While commenting on the foreign exchange (FX) reserves in the country, Fleming said market turnover had increased by two per cent from the September quarter of 2019 and 3.7 per cent from the June quarter of 2020 which was supported by strong gold and copper prices.
He said excluding the foreign exchange intervention by the Central Bank, the monthly foreign exchange market turnover rose by 15 per cent over the past six months.
“Stronger foreign exchange market turnover reflects stronger FX inflows from miners, Porgera mine closure flows and aid/development programme payments,” he said.
“It’s expected that the Porgera mine closure will reduce FX market turnover by six per cent in the final quarter of 2020.
“If negotiations conclude positively as has been indicated, then early spending on pre-reopening works will increase FX market turnover.”
Meanwhile, the PNG Manufacturers Council chief executive Chey Scovell says there has not been any notable easing.
“We still have businesses under significant distress from a lack of foreign exchange,” he said.
Furthermore, when asked about the business environment for the remainder of this year, Fleming said it was expected to remain mixed, pending further developments regarding the re-opening of the Porgera mine and the Wafi-Golpu and the P’nyang projects.
He said the relaxation of Covid-19 restrictions had improved consumer sentiment and spending.