When the Business Council proposed two options for the Bank of PNG to move forward - trading at its market value and devaluing kina - the business space suddenly put its foot down. They claim that smaller businesses are more worried than ever and are asking the government to establish a policy framework that can help them. According to Executive Director Douveri Henao, PNG is experiencing difficult times and during this health crisis, there is a need to make the kina attractive to the world for the country's exports.
“Largely because the whole world has literally come to a point where they’re not trading in noble conditions and our Kina should also not be trading in noble conditions,” he said in a statement. That’s one of the reasons why we’re also encouraging the monetary policymakers to consider these two options.”
Mr Hanao added that all economies around the world are currently making monetary adjustments whether devaluing their currencies or quantitative easing but still, the idea is to make the currency more tradable, effective, and attractive.
“That’s where we see the opportunity is presenting itself to revisit the trading of the kina in these very difficult and different times where it should be of consideration,” he said.
In a previous interview with the Central Bank Governor Loi Bakani, he maintained that devaluing kina doesn’t work with the country and this is a prescription for a well-developed economy. He added that while the kina has been depreciating at a slow pace, the currency can still move forward - it is just that PNG has a one-sided market.
He added that when a depreciation happens, reforms or other changes in the economy should transpire. He said that the Bank of PNG was in discussions with the Australian Treasury to involve market experts from Australia to aid the PNG to improve the domestic interbank market for a price-setting mechanism which works better than the current one.
