PGK continues drop against USD

The PNG Kina is likely to continue its fall against the US dollar, while a steady Australian dollar will see improved stability.

According to BSP’s Pacific and Economic Market Insight report, the Kina has traded flat in the first quarter of 2021, while year-on-year, it depreciated 2.4 percent against the US dollar, from 0.2920 to 0.2850.

Rohan George, BSP Group General Manager – Treasury, said: “The US Doller 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.”

The market exchange liquidity eased in the 1st quarter 2021, with market turnover falling by 8.3 percent in March and 5.2 percent over the March quarter.

George outlined expected foreign exchange inflows for the upcoming quarter, saying despite improving signs in the global economy, foreign exchange market turnover will remain subdued in April and May, with reduced foreign exchange inflows in April.

This follows the two-week OTML COVID-19 process alignment closure and the absence of foreign currency supplied to the market by Barrick.

He said next month will most likely see an increase in half yearly and end of quarter flows and reduce outstanding foreign exchange order bottleneck issues.

“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 affirmed this, 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.”

Press release