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Loi Bakani: Foreign Exchange Market Imbalance Greatly Reduced

By Leanne Jorari – EMTV News, Port Moresby

The Bank of PNG held a press conference today (January 25) following the public’s concerns over the current kina exchange rate and foreign exchange market.

Bank of PNG governor Loi Bakani, stated that due to a better foreign exchange inflow in 2018, the imbalance in the foreign exchange market has been greatly reduced.

The Central Bank, today, indicated that the foreign exchange market had benefited from the Governments external borrowings in 2018 which included the Credit Suisse 3rd tranche loan, the Sovereign bond, ADB and World Bank budget support loans as well as inflows from mineral and petroleum taxes, royalties and dividends.

Alleviating the pressure on the Forex market, though not completely cleared, total outstanding orders declined to 1.5 billion kina in December 2018 from a staggering K2.5 billion in 2017. And from the total outstanding orders, the backlog has declined to 0.4 billion in 2018 from 1.4 billion kina in 2017. This according to Bakani, reflects the gradual normalization of the Forex market.

Governor Bakani pointed out that the stability achieved so far should provide some confidence to the market. However, he reiterated that more needs to be done. Both in the short and long term, by all levels of government and the private sector, stressing that the country should not depend mainly on the mineral sector but diversify investments.

When asked about an approximate timeline for the foreign exchange market to normalize, Governor Bakani stated that it really depends on the finalisation of discussions and construction period of the Papua LNG project.

He estimated that the market will most likely return to normalize by the end of this year.

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