The continued record gold prices will have positive implications for PNG’s gold export proceeds, says Kina Bank.
According to Kina Bank Managing Director and CEO Greg Pawson the gold prices reached record historical highs of US$2,600 per ounce in September and that trend is likely to continue given the uncertainties around the global economic outlook, in particular with the looming U.S elections and on-going middle-east conflicts.
“During these periods, gold is often seen as a safe-haven asset for investors,” Mr Pawson said.
“In addition, the anticipated rate cuts by the U.S Fed is poised to weaken the U.S dollar. There
is a historical inverse relationship between gold and the dollar, so further rate cuts in the next
quarter could see gold prices continue to spike. This could have positive implications for PNG’s
gold export proceeds.” He said.
The bank also noted that there have been significant improvements in PNG’s foreign
exchange (FX) market. The PGK/USD interbank rate continues its downward trend, with the
import order book for essential items decreasing by 25% over the past year for Kina Bank.
This improvement is attributed to the Bank of PNG’s consistent intervention levels, with the
order book now also including non-essential goods in the import order book. Despite the
inclusion of these new orders waiting times for currency have still reduced from months to
around 4-6 weeks.
Meanwhile, PNG Stock Exchange-listed companies involved in the export of key
commodities reported very strong half-year profits, driven by high cocoa prices and resilient
global equity markets.
“Elevated international cocoa prices and resilient global equity market conditions were
some of the key drivers that supported the performance of the local companies. Looking
into the second half, we are expecting another strong performance from these companies.” CEO said.
