TOTAL outstanding foreign exchange (forex) orders with Bank South Pacific Financial Group Ltd (BSP) are approximately K120 million higher than at the same time last year, group chief executive officer Robin Fleming says.
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| PNG Currency [specimen] |
Fleming said the bank had seen a buildup in foreign exchange orders over the past few months due to a combination of
factors.
“The increase in energy prices globally has contributed to this with fuel related orders increasing as oil prices increase on the back of supply issues related to the Russia-Ukraine conflict,” he told The National.
He said business activity in the country had been positive in recent months attributable to, in part, the election, anticipation on major resource projects and higher commodity prices all of which were stimulating consumer demand and contributing to more demand for foreign exchange as imports increased.
Fleming said notwithstanding the increase in orders most corporate customers other than those with larger payments were having their orders filled within four weeks, retail customers with orders under K25,000 generally within a day or so, and other retail customers can expect to be paid within four weeks.
“The increasing quantum of fuel related orders though is putting pressure on the market as banks such as BSP look to balance the need to provide foreign currency to fuel suppliers against providing foreign currency to other corporate and retail customers,” he said.
“Bank of Papua New Guinea does intervene in the market on a regular basis and they would continually reviewing the overall supply of foreign exchange across the market.
“It is expected that higher energy prices will continue to influence the domestic foreign exchange market for at least the remainder of 2022.” Fleming said delays in
re-opening the Porgera mine contributed to foreign exchange inflow shortages as the mine had been a good source of foreign exchange to the market.
“Low rainfall in Western may also contribute to some delays in shipments of concentrate down the Fly River,” he said.
“Other key resource project decisions will be delayed by virtue of the election due to both investors waiting for an election outcome and government being in a caretaker mode.”
Fleming said the delays on part of the government and investors was not unusual and was experienced also in other countries during an election phase.
The National / Pacific Business News