BSP record foreign currencies inflows on the back of falling Kina

The recent Bank South Pacific Quarterly Public Economic and Market Pulse Report indicates that there are sufficient foreign reserves in the market, even though the value of the Kina is declining against major global currencies.

Rohan George, the General Manager of Treasury and Markets at BSP Group, mentioned that in the second quarter of this year, the foreign exchange market saw a 24.7 percent increase compared to the first quarter, amounting to a total of K14.2 billion.

"This growth was driven primarily by 18.3 percent increase inflows from exporters, state owned companies, [government] program support packages [and] Bank of PNG FX interventions."

However, Kina [PGK] continues to depreciate against United States Dollar [USD] and Australia Dollar [AUD] in the same period.

"The PGK/USD exchange rate under the 'crawling peg' over the quarter depreciation by 1.9 percent [and] the Kina also weakened by 3.7 percent against the Australia Dollar, influenced by expectations of improved AUD/USD interest rate differentials influenced by growing expectations of Australia rate hike in September due to rising inflation in contrast to expectations of the US rate cut in quarter-four in 2024…," Mr George said.