The PNG Kina is expected to continue falling against the US dollar.
The Kina traded steady in the first quarter of 2021, according to the BSP's Pacific and Economic Market Insight survey, thus depreciating 2.4 per cent year on year against the US dollar, from 0.2920 to 0.2850.
Rohan George, BSP Group General Manager – Treasury, said, “The US Dollar rallied against most currencies, as higher than expected economic and employment growth created inflationary concerns and fueled speculation that the US Federal Reserve would tighten monetary policy earlier than markets had initially expected.”
Business liquidity dwindled in the first quarter of 2021, with market volatility down 8.3% in March and 5.2 per cent for the quarter.
Despite strengthening signs in the global economy, George predicted that foreign exchange market turnover would remain sluggish in April and May, with decreased foreign exchange inflows in April.
This follows the two-week closing of the OTML COVID-19 phase alignment and Barrick's lack of foreign currency supply to the industry.
He predicts an uptick in half-yearly and end-of-quarter flows next month, as well as a reduction in pending foreign exchange order bottleneck problems.
“To manage reduced FX liquidity, businesses should place FX orders (with correct paperwork), as soon as possible, ensuring orders are cash-backed while awaiting execution, and that tax clearance certificates are current and reflect the expected FX order execution time.”
BSP Group CEO Robin Fleming agreed, saying, “The Government’s commitment to recommission operations of Porgera mine is a positive move that will also bring foreign exchange into the country and boost local and domestic economic activity.”
