2 Responses

  1. Mobile downloads
    Mobile downloads October 27, 2015 at 5:45 am

    I guess that the results could of been better. But considering that this is a new tool added to their economy, we can consider it as a promising start. I am sure taht once they get more experience, they will get better results. Does anyone share the same opinion? I would be nice if we could have similar recent situations to compare to.

  2. Paul Flanagan
    Paul Flanagan October 23, 2015 at 8:10 am

    Thanks Rohan. An excellent blog, highlighting how PNG’s exchange rate could have been used more effectively to deal with the recent fall in international commodity prices. For reasons of international comparability, it is understandable that Table 2 is based on changes relative to the US dollar. In PNG’s case, the relatively small appreciation shown against the USD of 5.99% to 1 June 2015 understates the Kina’s strong appreciation against most of its other trading partners. Its overall trade weighted index (TWI) is still well above its market levels back in June 2014 by about 20% reflecting strong appreciations against the AUD of 34%, the Indonesian Rupiah of 27% and the Malaysian Ringgit of 40%. Of even greater significance for PNG’s international trade competitiveness, PNG’s exchange rate (weighted by trading patterns and relative inflation rates – so the “Real Effective Exchange Rate”) is still at high levels not seen since the late 1980s, and some 60% higher than its levels in the early 2000s. It is this longer term pattern of real exchange rate appreciation that is undermining PNG’s international competitiveness, hurting domestic exporters, reducing incentives for foreign investment as well as failing to act as a shock absorber for commodity price changes.

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