Sovereign bond a short-term solution, Bank says

 THE Bank South Pacific says the sovereign bond is a short-term solution for the depreciating Papua New Guinea exchange rate.

It says in its Pacific Economic and Market Insight for the December quarter, the Papua New Guinea Kina depreciated against the United States dollar by 4.6 per cent to 0.33 per cent over the quarter. 

It blamed it on the lack of supply of foreign currency relative to demand. 

Bank South Pacific says over 2015, the Kina depreciated by 13.7 per cent and 2.2 per cent against the United States dollar and Australian dollar respectively.

Bank South Pacific in spite of Bank of Papua New Guinea’s effort to support the market, lower commodity prices and the recent El Niño weather phenomenon continued to impact foreign currency inflows. 

The Bank of Papua New Guinea requested for a follow-up International Monetary Fund technical assistance regarding its participation in the foreign exchange market. Bank South Pacific Group chief executive officer Robin Fleming said “for the short-term, a circuit-breaker is required and the sovereign bond will assist with this”.