‘PNG Kina weakened against US Dollar’

THE PNG Kina has weakened slightly against the US Dollar (USD), but outperformed all other currencies due to the US dollar strength, according to the Bank South Pacific Financial Group Limited (BSP).
Group chief executive officer Robin Fleming told The National that the strengthening of the Kina against the country’s major trading partner currencies would have a positive effect on local consumption.
This is considering the fact that PNG is a net importer of goods.
“The Kina has weakened slightly against the US Dollar, but outperformed all other currencies due to US dollar strength,” Fleming told The National.
“Despite the threat of a recession in the United States, monetary action by the US Federal Reserve to curb inflation has assisted the USD.
“The global shift towards tighter monetary policy and a flight-to-quality has seen investment capital, particularly from Europe, chasing USD-denominated safe haven financial assets.
“This has led to the US dollar index – a gauge to measure the strength of the USD against a basket of the world’s major currencies, reaching two-decade highs this month.
“The Australian Dollar and New Zealand Dollar are also affected by weaker commodity demand, particularly from China as strict lockdowns were put in place to deal with resurging Coronavirus (Covid-19) cases. “Excluding mining exports, PNG is by far a net importer of goods. “And the current strengthening of the Kina against our major trading partners will have a positive effect on local consumption, if imported inflation is less than the cross currency strength.
“Adversely, small-scale PNG exporters of agricultural commodities may see reduced demand as other currencies weaken against the PNG Kina.”