Robin Fleming, the CEO of Bank South Pacific Financial Group Ltd (BSP), has said that Papua New Guinea has recently seen a significant inflow of Foreign Exchange (FX) currency.
According to Mr Fleming, at the end of 2021, FX receipts increased from K9.21 billion to K10.175 billion in the final quarter. This amounts to a rise of K965 million or 10.5%. He said the increase was due to end-of-year dividend pay-outs, strong commodity prices, and cash from donors.
“FX market turnover rose by 7.4 per cent from a year earlier,” Fleming said. He added, “FX market turnover has risen by 9.8 per cent over the past six months, supported by strong commodity prices, in particular oil, copper, palm oil, coffee.
“Firmer commodity prices, combined with increased project-specific, donor foreign currency inflows and end of year dividend payments offset the lost FX market inflows from the closure of the Porgera gold mine (Barrick FX inflows down 75 per cent),” he said.
“The kina has been stable and unchanged against the US dollar for the past 14 months. However, the pullback in the Australian and US dollars amid the Coronavirus (Covid-19) related weakness in the Australian economy, [and] strength in the US economy, helped strengthen the kina against the Australian dollar.
“The kina is likely to remain stable against the US dollar, while a steady Australian dollar will see improved stability in the kina to Australian dollar cross rate.”
Looking ahead, Mr Fleming was not as optimistic. He thought foreign exchange currency turnover was likely to drop over the follower quarter to March 2022. He said, “December FX inflows have substantially reduced outstanding FX orders from high levels seen in November, and this is expected to reverse in January, February with post-Christmas restocking.”
