Outstanding FX at K785mil

OUTSTANDNG foreign exchange orders of Bank South Pacific Financial Group Limited customers have peaked at K785 million, an official says.
Treasury and markets group general manager Rohan George said it was about K550 million at the end of March.
He said inflows in the PNG market eased in the first quarter of 2024, due to lower Central Bank (Bank of PNG) intervention and exporter inflows. George explained that in the first quarter of 2024 (Q1-24), FX market turnover fell by 22 per cent compared to the final quarter of 2023.
“Outstanding FX orders and order execution times had lengthened in Q1-24, and FX market inflows also dropped by 21.7 per cent during the same period,” he said.
“Reduced BPNG intervention and FX inflows from exporters over the March quarter saw BSP customers’ outstanding FX orders peaking at K785 million. It had amounted to K550 million by the end of March.”
He added that the State of Emergency and National Interest orders were given priority over other orders. Additionally, trade and service orders were prioritised over capital payments such as dividends. This prioritisation contributed to longer execution times for orders in Q1-24.
Meanwhile, George said that the Kina-to-US Dollar exchange rate had depreciated further under the crawling peg, falling by 1.2 per cent to 0.2651 in the first quarter of this year.
He said the Kina was expected to depreciate against the USD by around 0.4 per cent per month or five per cent per annum. “The crawling depreciation of the PGK will be reviewed by BPNG and IMF in May. FX inflows to reduce as some fuel imports continue being settled in foreign currency offshore,” George said.
“With BPNG unlikely to increase the volume of FX intervention, outstanding FX orders are expected to move back to previous highs experienced in September and October of 2023.”